Shiseido shares dropped by 16% during trading in Tokyo on Thursday – its biggest slide in a single day since 1987 – leading to a trading halt.
The slump followed Shiseido’s 7 August announcement of mid-year results which had been hit by restructuring costs and sluggish demand in China.
The Japanese beauty giant reported an operating loss of ¥2.7bn (US$18.4m) for the six months to 30 June 2024, in contrast to operating profit of ¥13.6bn in H1 2023.
The NARS and Drunk Elephant owner’s H1 net sales were ¥508.5bn, down 0.5% on the prior year period on a like-for-like basis.
This excludes the impacts of foreign exchange translation and business transfers, as well as the company’s January acquisition of Dr. Dennis Gross Skincare.
Demand was slow in China, Shiseido’s largest market beyond Japan, with a “modest” performance reflecting faltering economic sentiment among Chinese consumers, according to the company.
Toshinobu Umetsu, China Region CEO at Shiseido, confirmed in a conference call that the expansion of unauthorised e-commerce platforms was driving “aggressive” consumer desire for “a channel… where they are purchasing at the cheapest price”.
Additionally, net sales for Shiseido’s Travel Retail business dropped 22.7% on a like-for-like basis.
This was reportedly due to lower shipping volumes once again reflecting changes in the purchasing behaviour of Chinese tourists.
Profit was pushed down particularly, meanwhile, by a restructuring charge associated with Shiseido’s Early Retirement Incentive Plan.
Part of the company’s ‘Mirai Shift Nippon 2025’ transformation plan, early retirement was offered to around 1,500 staff in Japan who met certain age and tenure requirements in April and May this year.
