TOKYO: Shiseido, Japan’s top cosmetics company by sales, now sees its annual net profit dropping by a wider-than-expected 46% on the year as Japanese and Chinese consumers tighten their purse strings.
The company’s new forecast of ¥25.5 billion (US$189 million) in 2022, announced Wednesday, marks a downgrade of ¥18.5 billion and factors in a ¥14 billion loss expected from the sale of personal care product factories.
Shiseido sees net sales increasing 6% to ¥1.07 trillion, cutting its previous forecast by ¥5 billion.
Sales in Japan fell 17% on the year in the January-June half as rising prices for food and other daily necessities squeezed consumers. Demand for midrange products priced around ¥3,000 has suffered.
Chinese sales dropped 20% on lockdowns in response to new Covid-19 cases. Shiseido lowered its full-year sales forecasts for both Japan and China – its two biggest markets – as well as for its Europe, Middle East and Africa segment.
Moving forward, Shiseido wants to boost brand power by better explaining the science behind its cosmetics, CEO Masahiko Uotani said.
As it focuses on winning customers for its high-end skincare products, the company will now invest this year an additional ¥5 billion in brand promotion and an extra ¥5 billion in staff development.
Overall, Shiseido reported a slight year-on-year drop in net sales to ¥493.3 billion for the January-June half. It swung to a net profit of ¥16.2 billion from a year-earlier ¥28.1 billion loss.