Shiseido sees strong results in second quarter boosted by Chinese business

The Japanese makeup brand announced strong results for the second quarter of its financial year on August 8, still supported in particular by its revenue from China and from airport retail outlets.

The business’ net profit for the second quarter of its financial year was up by 0.8% year-on-year at 18.9 billion Japanese yen ($176 million). Its quarterly operating profit increased at a greater rate of 25.4% to total 30 billion Japanese yen. 

The business’ turnover during the period totalled 291 billion Japanese yen which constituted a 8.3% year-on-year increase, and a 9.9% increase excluding currency  effects, according to a statement.

Much like the French beauty brand L'Oréal, Shiseido benefited from the consumer trend towards luxury cosmetics brands. This was especially in the case in China where total sales rose by 22% over the past quarter.  

Sales growth was also robust in the “travel retail” segment which saw 25% growth over the same time period. This was a clear growth acceleration compared to the beginning of the year.

Shiseido’s sales in Japan had also improved when compared to the first quarter of the brand’s financial year. This was also the case in the US, although growth in the region remained at a more moderate pace than in other areas.

Due to favourable tax conditions in the US, the group slightly raised its net profit forecast for 2019 on Thursday. Shiseido now expects a net profit total of 83 billion Japanese yen which would be a 35.2% increase compared to 2018, up from its previous forecast of 75.5 billion Japanese yen. 

The brand chose to maintain its forecast for an operating profit of 120 billion Japanese yen and even reduced its total revenue forecast to 1,164 billion Japanese yen compared to its previous forecast of 1,172 billion Japanese yen due to less favourable exchange rates and the anticipated negative impact of new US accounting regulations.

Shiseido also announced that it has signed a global licensing agreement with the New York-based fashion brand Tory Burch. The Japanese group will develop and retail products under the Tory Burch name, including makeup and fragrances, from January 1, 2020. The finances of the agreement were not disclosed.