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Shiseido Posts Net Loss in First Half, Increase in Sales

·3-min read

TOKYO — Shiseido said Thursday that it recorded a net loss of more than 17 billion yen due mainly to an extraordinary loss recorded as a result of the partial termination of its license agreement with Dolce & Gabbana. Its sales and operating profit for the same period increased.

For the six months ended June 30, Japan’s largest cosmetics company posted a net loss of 17.28 billion yen, or $158.2 million. The company said that excluding the extraordinary loss associated with the Dolce & Gabbana license termination, the net profit from its existing business was positive at 24.6 billion yen.

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The company posted an operating profit of 23.01 billion yen. This was up from an operating loss of 3.44 billion yen in the same period a year prior.

Shiseido’s first-half net sales grew by 21.5 percent to 507.69 billion yen. It said that slow momentum in its home market of Japan, where economic conditions remain challenging, was offset by strong growth in markets such as China, the Americas, Europe, the Middle East and Africa. The company also saw sales driven by its skin care brands and e-commerce.

In Japan, Shiseido’s sales declined by 1.1 percent on the year to 148.8 billion yen. It has focused its investment on what it calls the “skin beauty” category, which the company said is in line with changing consumer needs prompted by the COVID-19 pandemic. It also engaged consumers through omnichannel initiatives including live commerce and online video counseling, which it said drove e-commerce sales.

“Meanwhile, as COVID-19 cases resurged, sales were hit by a downturn in consumer traffic, resulting from shortened operating hours in the retail sector due to declared states of emergency and a decline in consumer sentiment due to a tendency to stay at home,” Shiseido said of its business in Japan.

Sales in China grew by 44.1 percent to 144.15 billion yen, accelerating even in comparison with 2019 levels.

“This robust growth was aided by boosted marketing investments, mainly in skin-beauty brands such as Shiseido and Clé de Peau Beauté,” the group said in a release. “In particular, our major brands performed well during the online 6.18 shopping festival with improved rankings, allowing us to gain market share.”

Separately, Shiseido said Thursday that it is launching an innovations fund in China, in order to tap into investment opportunities in emerging cosmetics and wellness brands.

Shiseido’s sales in the Americas increased by 46.7 percent to 53.89 billion yen, which it said was aided by the vaccine rollout and resulting recovery of the cosmetics market, including makeup. Nars was able to increase its share in the market due to virtual store openings and digital marketing measures, and both the Shiseido brand and fragrance brands performed well due to an increase in promotions.

The vaccination rollout also drove market recovery in the EMEA (Europe, the Middle East and Africa) region, where the company saw sales growth of 47.1 percent, to total 51.4 billion yen.

“We succeeded in capturing this turnaround to deliver solid growth through further rollout of our Clé de Peau Beauté and Drunk Elephant brands and a significant expansion in e-commerce sales thanks to online video counseling and digital promotions,” Shiseido said.

The company left unchanged its guidance for the fiscal year ending Dec. 31. It expects a net profit of 35.5 billion yen, which would be a significant increase compared with the net loss of 11.66 billion yen it posted in the previous year.

Shiseido predicts an 80.4 percent increase in yearly operating profit, for a total of 27 billion yen.

It is forecasting sales growth of 15.9 percent, totaling 1.07 trillion yen.

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