Shiseido reports ‘resilient’ FY19 performance despite challenges and uncertainties in the market

By Amanda Lim

- Last updated on GMT

Shiseido saw net sales and operating profit increase in FY19. ©Shiseido
Shiseido saw net sales and operating profit increase in FY19. ©Shiseido

Related tags Shiseido Japan

The Shiseido Company saw net sales and operating profit increase by 5.7% and 5.1% respectively due to the strong momentum in Travel Retail, China and EMEA, its full-year 2019 figures reveal.

The Japanese firm noted that it had been a challenging year due to the consumption tax hike in Japan, the tough market environment in Hong Kong and the weak performance in Europe and the Americas.

Despite the obstacles the company said its growth remained firm overall and managed to hit record-high sales, operating profit and net profit.

Shiseido’s travel retail segment was the top performer, growing 19.4%.

The company credited the growth to its expansions into new markets, the introduction of brands and its vigorous promotion and advertising activities in airports around the world.

This resulted in growth in sales of SHISEIDO, Clé de Peau Beauté, NARS, and ANESSA, mainly in South Korea, China, Thailand.

“We are working actively to strengthen [Travel Retail] as one of our most important businesses to further reinforce Shiseido’s position in the global prestige market as we recognise the significant potential for further growth of this business,”​ said Shiseido.

In China, the company continued to see rapid growth of brands such as prestige brands SHISEIDO, Clé de Peau Beauté, IPSA and NARS. Additionally, it also noted robust growth for its ELIXIR and ANESSA brands.

The company’s online sales recorded strong results fuelled by its digital marketing campaigns, collaborations with Chinese e-commerce platforms and an its aggressive launch schedule for products.

As a result, net sales rose 19.0% YoY for its China business, despite the impact from the Hong Kong demonstrations in the latter half of 2019.

In EMEA, net sales grew by 11.8% driven by new fragrance launches for Dolce&Gabbana and narciso rodriguez.

Additionally, NARS continued to see growth with SHISEIDO achieved solid performance in the make-up category.

The launch of Clé de Peau Beauté in London last October also contributed to the growth. The company said this has prompted it to pursue further brand expansion in Europe.

Shiseido saw growth in its home market slow down due to obstacles such as the impact of the consumption tax hike, which impacted its fourth quarter performance more than expected.

“Rush demand ahead of the consumption tax hike was followed by weakness in consumer sentiment after the hike, which also affected sales,” ​said the company.

2020 forecast

For 2020, the company said it has forecasted consolidated net sales to increase 8% to JPY 1.22tn (USD11.1bn). It expects operating profit and ordinary profit to increase by 2.8% and 7.6% respectively.

However, the company noted that its forecast for the next fiscal year does not take into account of the impact of the novel coronavirus (2019-nCov).

The company said it planned to accelerate growth in 2020 with its prestige brands and expanding its China and Travel Retail business while improving profitability in the Americas and EMEA.

Additionally, it hoped to strengthen its domestic market while also expanding the footprint of Drunk Elephant which it acquired last year.

The firm said: “We are evaluating the impact on our business and companies in Japan, China, and Travel Retail. We plan to more carefully assess this impact and reflect it in our business forecasts as appropriate.”

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