Shiseido offsets stagnant domestic sales
falling sales in the domestic Japanese market, says global
cosmetics player Shiseido.
The company reported that in the nine months up to December 31, 2007, sales grew by 3.7 per cent to ¥536.73bn (€3.4bn), compared to the same period in 2006 when sales grew by 3.4 per cent to ¥517.33bn. Strong sales growth in Asia and Europe have helped to offset falling sales in the domestic Japanese market, says global cosmetics player Shiseido. The company also reported a big rise in its operating income for the nine month period on the back of cost savings, rising 23.3 per cent to ¥50.25bn, compared to the same period last year. The company stated that the cost savings were derived from the result of marginal gains from its overseas expansion, an improved cost of sales ratio and a decline in domestic marketing expenses. Net profits up nearly 30 per cent The strong rise in the operating profit, combined with the more modest rise in group sales helped to push net income up by 29.3 percent to ¥26.21bn for the nine month period, a figure that was boosted by gains from the sale of shares in a logistics subsidiary, as well as a weak yen. Breaking the sales figure for the period down on a geographical basis, the company's core domestic market continues to present challenging conditions. Total sales for the period in Japan were ¥366.51, a fall of 2 per cent compared to the ¥374.0bn recorded a year earlier - a figure that reflected stiff competition and a price-sensitive retail environment. In Europe, the company's second largest market, sales grew by 21 per cent for the period, up from ¥67.38bn a year earlier to reach ¥81.40bn - a figure that was attributed to the the strength of the Shiseido brand and designer fragrances. Biggest gains come from China However, the biggest gains were seen in the Asia and Oceania market, where sales grew by 21.4 per cent, up from ¥58.29bn a year earlier, to reach ¥70.76bn for the nine month period ending in December. The company said that the highlight in the Asia and Oceania market had been China, where dedicated brands specifically aimed at Chinese consumers had performed 'outstandingly'. In the US sales grew by 11.1 per cent to reach ¥48.65bn, gains that, as in Europe, were attributed to the strength of the Shiseido brand and designer fragrances. On the back of the poorer performance in the domestic market, Shiseido has cut its full financial year sales forecast from ¥730bn to ¥ 725bn, but said that projections for full year profits would remain the same, at ¥60bn.