Shiseido Net Sales Reaches $3.45Bn with China Business Leading Growth
- Chaileedo Press
- Aug 8, 2023
- 3 min read
Net sales in the China business amounted to 130.609 billion yen ($913 million), a sharp 12.8% increase year-on-year, and accounted for 26.4% of the Group's overall sales.
Shiseido, a leading beauty and cosmetics company, has released its financial report for the first half of 2023. Shiseido stated that despite challenges and uncertainties, Shiseido achieved overall positive results and steady growth in its key markets.
In terms of net sales, Shiseido achieved 494.189 billion yen ($3.45 billion), a slight increase of 0.2%. Overseas cosmetics markets also continued to recover overall. In China, the market was particularly challenging in January due to the resurgence of infections as a result of the government's lifting of its zero COVID policy; however, the market recovered from February onwards, and the first half of the year as a whole showed steady growth, partly due to a lower base as a result of the blockade centered on Shanghai in April last year. Consumption also continued to be buoyant in Europe and the Americas, with all categories of the cosmetics market showing similarly strong growth.
Despite positive sales growth, operating profit declined by 19.7% to 13.632 billion yen ($95.3 million). The decline in operating profit was due to uncertainties such as the protracted conflict in Ukraine and rising prices. However, personal consumption showed signs of improvement and economic activity normalized during the period.
Breaking down the regional results, the Japan business posted net sales of 125.157 billion yen ($87.5 million), up 8.2% year-on-year, and accounting for 25.3% of the Group's overall sales. Shiseido successfully launched innovative new products across several brands, capitalizing on the recovery in demand following the relaxation of mask use and the increased opportunities for people to go out. sales growth was strong at brands such as Clé de Peau Beauté and SHISEIDO, and new ELIXIR products featuring the latest technology also performed well. In addition, MAQuillAGE also posted significant growth as it responded to the revived demand for color cosmetics.
Net sales in the China business amounted to 130.609 billion yen ($913 million), a sharp 12.8% increase year-on-year, and accounted for 26.4% of the Group's overall sales. It is worth noting that in the first half of 2023, China was the Shiseido Group's largest business market. In its China business, Shiseido has transitioned from a growth model primarily driven by mass promotions to a more sustainable approach that focuses on value-based brand and product communication to meet consumer needs. Shiseido's growth was driven by the offline channel, where brick-and-mortar stores provide consumers with a unique brand experience. clé de peau Beauté, on the other hand, primarily through e-commerce channels Growth was achieved through e-commerce. Shiseido's success in the "618" e-commerce promotion was due to platform diversification, emphasis on highly functional products and highlighting product efficacy. As a result, Shiseido's growth in China exceeded market expectations.
Net sales of the Asia-Pacific business were 30.680 billion yen ($214.5 million), a slight decrease of 2.2% year-on-year on a reported basis, accounting for 6.2% of the total. Net sales in the Americas business declined 10.5% year-on-year on a reported basis to 52.8 billion yen ($369.1 million), accounting for 10.7% of the total, while net sales in the EMEA business declined 5.6% year-on-year on a reported basis to 52.6 billion yen ($367.7 million), accounting for 10.7% of the total.
In the travel-retail business, which sells cosmetics and perfumes mainly through duty-free stores in airports and city centers, Japan experienced a strong recovery as a result of increased tourist traffic and the mitigating effects of COVID-19. However, sales in Korea and Hainan Island in China declined compared to the prior year as retailers adjusted their inventories and the market normalized due to changes in the business model that prioritized tourists. As a result, net sales in the Travel Retail business amounted to 77.5 billion yen ($541.7 million), down slightly by 0.5% year-on-year, and accounted for 15.7% of the total.
In response to the challenges posed by the COVID-19 pandemic, Shiseido launched its medium- to long-term strategy "WIN 2023 and Beyond" in 2021. The strategy focuses on fundamental transformational changes to improve profitability and cash flow. As part of this strategy, Shiseido is focusing on the dermatology and beauty segment, restructuring its business portfolio with the aim of improving profitability, particularly in the Americas and EMEA regions.
Looking ahead to a full market recovery by 2023, Shiseido has launched a new medium-term strategy called SHIFT 2025 and Beyond. The company aims to achieve a core operating margin of 12% by 2025 and 15% by 2027 through increased investment in brands, innovation and talent. Shiseido also plans to create a value-added base management model that provides unique value unmatched by any other company. In the first year of implementing this new strategy, the company seeks to strengthen its brand equity through strategic marketing, outperform market growth, and increase market share in all regions.
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