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Shiseido profit and sales impacted by continued challenges in China and travel retail

Sophie Smith
16 May 2024

Japanese beauty group Shiseido has reported an increase in sales to £1.2 billion (¥249.5 billion) for the first quarter, but faced continued challenges in China and across its travel retail business.

Net sales lifted 3.9% on a reported basis for the three months ending 31 March 2024, but dropped 2.7% on a constant currency basis.

The company said it delivered "robust" growth in Japan, the Americas and EMEA, bolstered by innovations and new product launches.

In the Japan business, Shiseido accelerated growth, benefiting from the success of its activities focusing on high-growth and high-profit brands, as well as strategic marketing for creating new categories coupled with an increasing demand from inbound tourists.

Meanwhile, the Americas and EMEA businesses maintained a "steady" momentum, with growth from the Shiseido brand as well as fragrances, led by Narciso Rodriguez. It comes as the firm eyes further UK growth as it drives continued brand awareness and sales in the region.

Drunk Elephant also enjoyed another quarter of growth following a number of brick-and-mortar footprint and proactive marketing activities. As a result, EMEA net sales reached £177 million (¥34.8 billion), up 25.2% on a reported basis and 10.4% on a constant currency basis.

While many beauty companies are struggling in China due to a decline in travel retail and a slowdown in spending, Shiseido also said the release of treated radioactive water from the Fukushima nuclear plant last year, which triggered a boycott of Japanese products by Chinese consumers, continued to impact sales, with a decline of 3% in the region.

Net sales also dropped across its travel retail business due to "retailer inventory adjustments amid tighter regulations with the ongoing shift in retailers returning back to a business model focused on tourists".

While the profitability of the business was impacted by the weak sales growth in China and across travel retail, Shiseido said it managed to deliver growth in core operating profit across all other segments, namely its Japan, China, Asia Pacific, Americas and EMEA businesses.

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