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Shiseido Sales Drop for the Quarter

Posted: July 31, 2012

Shiseido reported its financial results for its first quarter of 2012 (three-month period from April 1 to June 30, 2012). Economic sentiment in Japan was characterized by continued uncertainty about the future, due to such factors as concerns about the yen’s prolonged appreciation and the depressed stock market. Amid solid restoration-related demand following the East Japan earthquake, however, the economy adopted a moderate recovery tone, and the cosmetics market also showed signs of a slight turnaround. Overseas, despite apprehension about the effects of the debt crisis in Europe and slower economic growth in China, the cosmetics markets in the Americas continued growing, albeit moderately, while cosmetics markets in China and elsewhere in Asia also continued expanding.

For the quarter, Shiseido posted consolidated net sales of ¥149.4 billion, down 5% from the previous corresponding period. The domestic business segment reported a 9.6% decline in sales, to ¥75.5 billion, due to several factors. These included a spike in sales in the previous corresponding period as shipments scheduled for March 2011 slid into April and beyond due to turmoil in the distribution system following the earthquake. There was also a year-on-year recoil in sales vis-à-vis the previous corresponding period, when sales were boosted by the renewal of the Tsubaki hair care line. By contrast, the global business segment benefited from healthy results in China, as well as solid performances by the makeup brand Nars in the Americas and the fragrance business in Europe. Accordingly, segment sales in local-currency terms rose 4.1% year-on-year. Due to foreign exchange factors, however, sales in yen terms edged down 0.1%, to ¥71.7 billion.

The company also reported an operating loss of ¥3 billion for the period, and the marginal loss stemming from the decline in net sales was a major reason for the operating loss. Other factors included aggressive allocations of marketing expenditures aimed at growth, mainly in overseas markets. The company recorded an ordinary loss of ¥2.7 billion.

In light of this performance, foreign exchange trends and others in the first quarter under review, Shiseido has revised its consolidated forecasts for the first two quarters ending Sept. 30, 2012, and the fiscal year ending March 31, 2013. Previously, the company forecast ¥345,000 million in net sales for April 1-Sept. 30, 2012, but it is now revised to ¥337,000 million; additionally, an operating income forecast of ¥17,500 million was revised to ¥11,500 million, changing the net income forecast from ¥8,000 million to ¥5,000.

Find more details on this financial report on Shiseido's website.