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Shiseido released its consolidated settlement of accounts for the first three quarters ended December 31, 2013. Net sales for the period were ¥535 billion (a 10.4% increase over the same period in 2012), operating income was ¥33 billion (a 264.3% increase), ordinary income was ¥35 billion (up 250.7%), and net income was ¥16 billion (an increase of 267.2%).
In the three-quarter period under review (nine-month period from April 1 to December 31, 2013), the economic sentiment in Japan was characterized by moderate recovery underpinned by government economic measures. The domestic cosmetics market also showed indications of a turnaround. However, there are concerns consumer sentiment will be dampened by a hike in consumption tax scheduled for April 2014, leaving no room for complacency. Overseas, the Americas and Asia continued posting moderate economic growth, but conditions weakened in Europe. Similarly, cosmetics markets in the Americas and Asia enjoyed sustained growth, while growth in the European market was negative.
In this environment, Shiseido allocated resources to strong, big, and highly profitable fields under its distinction and concentration policy. To this end, the company focused on reinforcing its strengths in three areas: Japan, China, and Bare Escentuals, Inc.
As a result, Shiseido posted consolidated net sales of ¥535.4 billion, up 10.4% from the previous corresponding period. Despite healthy performances by MaQuillAge and Elixir—which are core lines in the mid-priced range—sales in the domestic cosmetics business segment edged down 0.4%, to ¥251.2 billion. This was due to recovery of inventories aimed at optimizing store-level inventories. The global business segment benefited from solid performances by the global brand Shiseido and the makeup artist brand Nars, as well as an expanding fragrance business in Europe. However, segment sales grew just 0.3% on a local-currency basis. This was due mainly to a year-on-year sales decline in the company’s Chinese business.
After translation into yen, however, segment sales jumped 22.7%, to ¥276.8 billion, owing to the yen’s depreciating trend. Sales in the other segment increased 4.4%, to ¥7.4 billion, thanks largely due to a favorable performance by the company’s restaurant business. Operating income surged 264.3%, to ¥33.3 billion, due partly to a marginal gain stemming from higher net sales, as well as cost reductions centered on cost structural reforms. In Japan, Sheseido also reduced personnel expenses, including bonuses and pension costs. Ordinary income jumped 250.7%, to ¥35.4 billion, and net income grew 267.2%, to ¥16.7 billion.