On Friday February 9, the Japanese cosmetics giant published its results for 2023, showing a fall in profits of almost 40%. This underperformance is attributed in particular to the slow economic recovery in China, but also to the boycott of Japanese products in the Middle Kingdom.
Shiseido finds itself in turmoil. In 2023, the Japanese cosmetics giant’s net profit fell by 36.4% to 21.7 billion yen (134 million euros). Annual sales, meanwhile, fell by 8.8% to 973 billion yen (6.04 billion euros), while operating profit dropped to 28.1 billion yen (174 million euros) from 46.5 billion yen (288 million euros) last year.
The weak economic recovery in China, combined with Japan’s decision to release water from the Fukushima power plant into the ocean, had a significant impact on Shiseido’s results. This decision aroused opposition in China and led to a boycott of Japanese products, particularly in the cosmetics sector. As a result, sales were affected in both China and Japan.
“We recognize that the macroeconomic figures are not good,” said Kentaro Fujiwara, Shiseido President and COO, of China. “We must not only consider the macroeconomics, but also carefully assess the sectors where we have a chance to win and where growth is underway.”
Kentaro Fujiwara indicated that new strategies will be implemented with regard to Chinese consumers. Shiseido intends to reduce its dependence on large-scale events organized in the country and cut back on promotions.
“We will create synergies by adopting an integrated approach for China and travel retail, in order to reinforce brand value and optimize investments for Chinese consumers”, he added.
Performance in US markets
While facing major challenges in China, Shiseido performed better in the US markets. Sales were buoyed by strong demand for Drunk Elephant products, as well as stable growth for flagship brands such as Shiseido and NARS.
In the US, operating profit totaled 11.2 billion yen (69 million euros), an increase of 3.5 billion yen (21 million euros). This rise is mainly attributable to the increase in gross margin, resulting from higher sales.
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