Shiseido’s China woes aren’t over yet.
The Japanese beauty group’s net sales rose 4 percent to $1.6 billion in its first quarter, as brand wariness in the giant Chinese market continued to weigh on growth elsewhere, the company said. he said on Friday.
While many premium beauty companies are struggling in China due to a decline in travel retail and a recovery in discretionary spending, Shiseido, which owns premium brands such as Nars, Drunk Elephant and Clé de Peau, has a more unique problem. The release of radioactive treated water from the Fukushima nuclear power plant in August 2024 led to a Chinese boycott of several Japanese-owned brands. In China, first-quarter net sales decreased 3 percent on a like-for-like basis to $356 million.
The company said its Clé de Peau Beauté and Nars brands, which are not marketed under the Shiseido name, performed well, while its namesake line saw another quarter of negative sales growth.
Operating profit for the group fell 10 percent due to weak sales growth in travel retail and a decline in intersegment sales. The company is in the midst of a strategic change, aimed at reducing its reliance on promotions to fuel growth in favor of brand growth.
Outside of China, other markets are much better. In the United States (a key growth market for the company), premium skin care lines Drunk Elephant and Dr. Dennis Gross contributed to a 9 percent increase in sales. In Europe, the popularity of the group’s Narciso Rodriguez fragrance line boosted sales.
Travel sales fell 30.5 percent due to retailer inventory adjustments and low footfall in the popular shopping destinations of Hainan and South Korea, although the company has said sales rose at Japanese duty free outlets as tourists began to return.
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