Japan
www.shiseidogroup.com
Sales: $6.3 billion

Key Personnel: Masahiko Uotani, president and chief executive officer; Yoichi Shimatani, chief research and development officer; Jun Aoki, chief people officer; Jean-Philippe Charrier, president, Asia Pacific; Louis Desazars, president and chief executive officer, Shiseido EMEA; Kentaro Fujiwara, chairman and president, Shiseido China; Takahiro Hayashi, chief creative officer; Katharina Höhne, senior vice president, global professional business; Masaya Hosaka, chief technical strategy officer; Mitsuru Kameyama, chief information officer; Yasushi Kushida, chief supply chain officer; Philippe Lesné, president, travel retail; Yoshiaki Okabe, brand director, Shiseido; Marc Rey, president and chief executive officer, Shiseido Americas; Yoshihiro Shiojima, chief legal officer; Mikiko Soejima, chief beauty officer; Shigekazu Sugiyama, senior vice president, cosmetics brands, Shiseido Japan; Norio Tadakawa, chief financial officer; Mari Tamura, senior vice president, global prestige brands.

Major Products: Skin care, color cosmetics, sun care, fragrances and toiletries. Prestige—Shiseido, Clé de Peau Beauté, BareMinerals, Nars, Benefique; Fragrances—Issey Miyake, Narciso Rodriguez and Elie Saab fragrances; Professional—Shiseido and Joico; Cosmetics—Elixir, Maquillage, Haku, Prior, Anessa, Aqualabel, Integrate, Za, Aupres, Urara, Pure & Mild; Personal Care—Tsubaki, Sea Breeze, Senka; Health Care—The Collagen, Ihada.

New Products: Ipsa Metabolizer, Elixir skin brightening line, Ultimune Serum; Acquisitions—Laura Mercier and RéVive.

Comments: Shiseido is finally turning things around—both around the world and in its critical home market. Domestic sales increased nearly 12% and international sales increased 5.4% (local currency) and 13.3% (yen). Sales rose in every market, according to company executives. In fact, CFO Norio Tadakawa pointed out it was Shiseido’s first year of growth since the financial crisis of 2008.

Sales in Japan rose 10.9%. Sales rose sharply in the prestige sector, with Shiseido increasing 43% and Clé de Peau Beauté sales up 36%. Core, mid-priced brands such as Elixir and Maquillage had good gains, but value-priced cosmetics struggled in Shiseido’s home market. This year, the company expects Japanese sales to grow 3%.

International sales rose 5.1% on local currency terms, but the weak yen boosted the gain to nearly 13%. Cosmetics sales in China continue to grow at a high single-digit pace, though the deceleration of the economy is cause for concern. Good news came from Singapore, Malaysia, Vietnam and travel retail, where sales were solid in 2015.

In the Americas, bareMinerals’ sales were flat, but gains were recorded for Shiseido sun and skin care products and Nars cosmetics. Shiseido admitted that its brands struggled in Germany, Switzerland and other parts of Europe, but there were some bright spots, specifically the sales gains registered by the prestige fragrances.

Last year, the company moved to a January-December fiscal year. Results are for the nine months from April 1, 2015 to Dec. 31, 2015 for Shiseido and its consolidated subsidiaries in Japan and the 12 months from Jan. 1, 2015 to Dec. 31, 2015 for all other subsidiaries.

Now Shiseido is embarking on a new plan, Vision 2020, which calls for net sales of more than one trillion yen, operating income over 100 billion yen and return on equity of at least 12%. The goal, say company executives, is to become a company that is supported and needed by consumers worldwide. To get there, Shiseido must become more consumer-oriented, nurturing strong brands built on research and development, people and organization, and marketing.

For the first quarter of 2016, sales rose 1.4% to a record ¥213.3 billion. Sales of prestige products led the way with a gain of more than 10%. Cosmetic sales increased 1.4% and professional sales rose less than 1%. Meanwhile personal care sales were flat and fragrance sales declined 5.4%. Forex effects reduced sales 6.7%.

Most regions posted gains in Q1. Sales in Japan rose 4.5% and China gained 4.2%. Elsewhere, Asia-Pacific grew 1.2% and the Americas added nearly 1%. Only Europe, Middle East and Africa reported a decline in sales (3.2%). Travel retail sales rose 2.1%.

Shiseido continues to make more to shore up its presence outside Japan. In May, the company dedicated a new research facility in Windsor, NJ. Research will focus on color cosmetics. It joins the Japan Innovation Center focusing on skin and the European Innovation Center focusing on fragrance.

“With the opening of this Innovation Center, we are firmly in the most dynamic, exciting market in the world,” explained Masahiko Uotani, president and group CEO, Shiseido Co. Ltd. at the opening earlier this year. “My dream is that the Americas Innovation Center develops innovative products that make the consumer say, ‘Wow! I never thought of that!’ Just like the reaction that Sony got when it launched the Walkman.”

The oohs, ahs and wows continued in June when Shiseido acquired Gurwitch from Alticor. The deal adds the Laura Mercier and RéVive brands to Shiseido’s prestige portfolio. No purchase price was disclosed, but Gurwitch had sales of $175 million last year.

Last month, Jill Scalamandre joined Shiseido as the president of the global makeup center of excellence. She will report to Marc Rey, president and CEO, Shiseido Americas. Prior to joining Shiseido, Scalamandre served as chief marketing officer, skin care, Coty and senior vice president, Philosophy.

For the full year, Shiseido expects its global sales to rise 3% on a local currency basis. Looking even farther ahead, a global innovation center should be completed in Yokohama in 2018.