Shiseido’s annual operating profits plunged 73.1% last year, with the slump attributed to a drop in consumer spending in key market China.
The Japanese beauty giant posted an operating profit of ¥7.58bn for the 12-month period ending 31 December 2024, down from ¥28.13bn the previous year.
Sales were up 1.8% in reported terms but dipped 1.3% on an organic basis against 2023.
The owner of Drunk Elephant and NARS cited weaker consumer spending in China as a key factor in its financial performance decline.
It claimed the beauty market’s downturn had persisted longer than anticipated.
Shiseido’s business in China was down 4.6% year-on-year on a like-for-like basis, excluding the impact of foreign exchange and business transfers.
The company forecasts a further sales decline in China in 2025.
“In the overseas cosmetics market, the trends and pace of growth were mixed across regions,” read a statement from Shiseido.
“The duty-free retail market, including Hainan Island, continued to face challenges amid deceleration in consumer spending driven primarily by Chinese tourists.
“While the impact of retailer inventory adjustments in response to tighter regulations had receded steadily over the period.
“China’s cosmetics market suffered a prolonged downturn, weighed down by a decline in consumer spending and rising household savings amid worsening economic sentiment.”
Shiseido is not alone in this issue of subdued sentiment from Chinese consumers.
Both L’Oréal and Estée Lauder have recently reported that their earnings have been impacted by poor results in China.
However, Shiseido said its markets in the US and Europe reported “modest growth overall”, with signs of a slowdown starting to be seen in the latter half of the year.
The company also experienced growth in its domestic market, with a 10% increase in net sales in Japan.
It expects similar growth in its domestic market this year, supported by purchases from tourists.
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