TOKYO — Shiseido posted a nine-month net profit of more than 36 billion yen, after having recorded a loss in the same period a year prior. The company also saw sales and operating profit increase, despite challenging business conditions brought on by the COVID-19 pandemic.
For the nine months ended Sept. 30, Japan’s largest cosmetics company recorded a net profit of 36.76 billion yen, or $325.5 million at current exchange rates. The profit was mainly due to increased sales and operating profit, as well as extraordinary income recorded as a result of the business transfer of its personal care segment.
The company said its nine-month operating profit nearly tripled compared with the same period a year prior, coming in at 8.91 billion yen. It managed to improve its margins thanks to stronger sales and effective cost management measures.
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Shiseido’s net sales grew by 14 percent to total 745.37 billion yen. It said while conditions remained challenging in Japan, there were signs of recovery in some other regions.
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“In the Japan cosmetics market, consumer traffic decreased as a result of consumers staying at home and shortened operating hours in the retail sector under the declared states of emergency. Other factors included a drop in visitors to Japan, which affected inbound demand,” the company said in a statement. “Globally, although the impact of the pandemic continued overall, progress in vaccination rollout drove recovery across all cosmetic categories, even makeup, which had struggled, particularly in Europe and the United States.”
Shiseido’s nine-month sales grew by double digits in all regions except its home market of Japan, where net sales slipped by 7.3 percent to 210.28 billion yen. The company blamed the decline on shortened operating hours and a decrease in consumer foot traffic due to a declared state of emergency that lasted for several months.
In China, the company’s sales increased by 23.1 percent to 190.89 billion yen.
“The China business was affected by partial retail closures and a drop in consumer traffic from July onward due to unprecedented torrential rains and new COVID-19 variant outbreaks in key metropolitan areas,” Shiseido said. “However, e-commerce sales, an area of boosted investment, remained strong. Moreover, continued strategic investment in prestige brands such as Clé de Peau Beauté and Nars drove market share gains in the high-end category.”
In its Americas business, Shiseido’s sales shot up by 36.3 percent to 89.78 billion yen, driven by a recovery in the cosmetics market due to the COVID-19 vaccine rollout. The company opened new Drunk Elephant locations and grew the Nars market share via virtual store openings and other digital marketing initiatives. The company said its Shiseido, Clé de Peau Beauté and fragrance brands also performed well in the region.
Shiseido also revised its guidance for the fiscal year ending Dec. 31, lowering its forecasts for net profit and net sales, but raising its estimate for operating profit.
“The revised forecast is based on the assumption of gradual market recovery in line with the COVID-19 vaccination rollout, while incorporating the impacts of the recently announced business transfers and other structural reforms, and foreign currency translation effects,” it said.
The company now expects yearly net profit to come in at 30 billion yen, down from a previous forecast of 35.5 billion yen.
The company is now expecting its full-year operating profit to more than double, for a total of 32 billion yen. It previously predicted growth of 80.4 percent, to total 27 billion yen.
In its latest guidance, Shiseido is now forecasting yearly sales of 1,044 trillion yen, representing year-over-year growth of 13.4 percent.