Japanese company Shiseido’s net sales rose 7.5% year-over-year to ¥244.01bn ($2.24bn) in the first quarter of 2021. The increase is thanks to skin beauty brands’ performance and growth of e-commerce, particularly in the prestige category.
Operating profit grew 67.6% year-over-year to ¥10.9bn ($99.45m) due to improved margins resulting from stronger sales. EBITDA increased 31.4% to ¥31.54bn ($289.23m) in the period compared to the same quarter a year prior.
Although some countries and regions showed signs of recovery from the COVID-19 pandemic, the impact continued overall, the company says, particularly affecting the make-up market.
In Japan sales fell 12.1% year-over-year to ¥75.29bn ($690.45m). During the quarter, Shiseido focused on strengthening the skin beauty category and meeting consumers’ new needs caused by the pandemic.
The company sought to increase its contact with consumers. One example of this was the launch of a dedicated e-commerce platform for cosmetics specialty stores in March, called Omise Plus. The platform hosts live commerce events and virtual counseling sessions. As a result, e-commerce sales in the country rose year-over-year in the quarter.
However, a resurgence in COVID-19 cases affected brick-and-mortar operating hours and consumer sentiment which negatively impacted sales.
China’s net sales rose 46.8% to ¥65.35bn ($599.64m) compared to the same quarter the year prior. Both offline and online sales grew strongly and accelerated even in comparison with the fiscal year 2019. Higher marketing investments, mainly for skin beauty brands such as SHISEIDO, Clé de Peau Beauté, and IPSA, coupled with promotions for International Women’s Day in March and Shiseido’s 40th anniversary of business activities in China, also contributed to growth.
Although the impact of the pandemic continued in some Asia Pacific countries and regions, there were signs of recovery overall, Shiseido said. The market’s net sales grew 9.6% to ¥16.53bn ($151.65m) compared to the same period the year prior. Shiseido claims it increased its market share in Taiwan and other major markets, while in Vietnam and Singapore it saw double-digit growth. E-commerce sales doubled, driven by SHISEIDO and other brands, thanks to expansion into major e-commerce platforms in various regions.
The Americas sales were up 4.6% to ¥24.37bn ($223.63m) compared to the first quarter of 2020. NARS sales grew year-over-year thanks to a new virtual store opening and other initiatives to strengthen digital marketing. Meanwhile, SHISEIDO and fragrance brands performed well thanks to increased promotions.
EMEA saw sales increase 19.6% year-over-year to ¥24.44bn ($224.26m). The business’ performance was still affected by the pandemic, but the company says it made progress in expanding its Clé de Peau Beauté and Drunk Elephant brands. E-commerce sales continued to grow thanks to online counseling and digital promotions.
Travel-retail sales rose 0.7% year-over-year to ¥27.98bn ($256.76m). The channel is still impacted by the decline in international travel. However, consumer purchases in Asia grew year-over-year as Shiseido increased its number of stores and strengthened promotions in Hainan, China. The group also opened new counter openings for the IPSA and ELIXIR brands.
The company has revised downward its fiscal 2021 net sales and operating profit outlook. Net sales are now expected to reach ¥1,067.0 billion ($9.79bn), down ¥33bn ($302.77m) from the previous forecast announced in February, and operating profit is forecast to reach ¥27bn ($247.72m), down ¥8bn ($73.4m).
Although Shiseido does not expect any changes to its forecast for net sales and profit of existing businesses announced in February, it forecasts a decrease in net sales and operating profit in the second half of the year as a result of the sale of its mass personal-care business to private-equity company CVC and the creation of a joint venture, as well as continued distribution of personal care products to the succeeding company following the transfer.
As reported, Shiseido said in February that it is to sell its mass personal-care business to private-equity company CVC Capital Partners for ¥160bn ($1.52bn) as the group looks to focus on its prestige brands.
However, the group said that net profit is expected to come in higher at ¥35.5bn ($325.71m), up ¥24.0bn ($220.2m) from the previous forecast. This takes into account the gains from the transfer of shares of the personal-care business and impact resulting from the partial termination of license agreement with Dolce&Gabbana.
As reported, Shiseido said last month that it is to partially end its beauty license with Italian fashion brand Dolce&Gabbana. The termination of the agreement will be effective for all markets, apart from France, on December 31, 2021.