Covid-Related Lockdowns in China, Impact Shiseido’s First Half Results

Blaming weak domestic demand and a covid-related lockdown in China, Shiseido’s sales and profit declined in the first half of the fiscal year. However, sales were strong in travel retail, the Americas, EMEA and Asia Pacific. Shiseido also noted that brands such as Clé de Peau Beauté and Nars posted good gains.

Net sales fell 0.4% to 493.4 billion yen ($3.72 billion at current exchange rates), in the first six months of the fiscal year ended June 30. Core operating profit dropped 23.9% year-on-year to 17.5 billion yen ($132.1 million). The declines led Shiseido to lower its full year forecasts; to 1.07 trillion, down 5 billion yen from the previous forecast, and core operating profit to 40 billion yen, down 22 billion yen.

“In Japan’s domestic cosmetics market, although a gradual recovery was seen thanks to the relaxation of activity restrictions, the market environment remained challenging due to delays in the recovery of consumer appetite for cosmetics consumption and increased frugality influenced by the extensive price hikes,” the company said. “In terms of overseas cosmetics market, in China, the market environment was sluggish due to the restrictions in retail operations and supply chain disruptions caused by lockdowns primarily in Shanghai,” it added. “Meanwhile, in Europe and the United States, consumption continued to recover steadily as economic activities resumed, and the cosmetics market also showed strong growth across all categories.”

In other news, Shiseido Beauty Innovations Fund announced its first investment. The Fund will invest $14.5 million into Jiangsu Trautec Medical Technology Co. Ltd., a Chinese maker of recombinant collagen-based biomaterials.