Shiseido reports 19% drop in sales in 2020, slips into loss
Japanese cosmetics giant Shiseido announced an 18.6% decrease in its full-year sales on Tuesday, falling into loss as the Covid-19 pandemic took its toll on the company’s operations, especially on its home market.
The beauty group’s net sales for 2020 were 920.9 billion yen ($8.6 billion), down from 1.1 trillion yen in the previous year.
The company’s sales fell 29.7% to 303.0 billion yen in Japan, where recovery from the effects of the Covid-19 pandemic has been slow. Shiseido has attempted to respond to changing consumer needs on its home market by launching products such as MAQuillAGE, a mask-proof BB cream, as well as Ihada medicated hand sanitizer and Shiseido Ultimune Power Infusing hand cream.
Annual sales dropped 25.7% to 91.4 billion yen in the Americas region, reflecting the effect of lockdowns and stay-at-home orders, as well as an increase in retailers filing for bankruptcy. E-commerce was a bright spot in the region, led by growth in prestige skincare brand Drunk Elephant, acquired by Shiseido last year.
In Europe, the Middle East and Africa (EMEA), sales totaled 94.3 billion yen, decreasing 20.4%, while in Asia Pacific, where sales totaled 59.2 billion yen, the decline was 15.3% year over year.
China was the only country in which Shiseido saw growth, with the market posting a 9.0% rise in sales totaling 235.8 billion yen. After a difficult start to the year due to the coronavirus, the company’s sales on the market began to recover from late March and posted a particularly strong fourth quarter, thanks in part to an impressive performance on China’s Singles’ Day.
Full-year net loss at the company came to 11.7 billion yen ($109.6 million), down from net income of 73.6 billion yen in the previous year.
In the fourth quarter, Shiseido’s net sales totaled 267.2 billion yen, down 6.2% compared to 284.9 billion yen in the same period in the previous year. Net profit for the period was 2.0 billion yen, increasing from 1.1 billion yen in the prior-year period.
Looking forward, Shiseido expects to return to profit in fiscal 2021. The company predicts that it will report annual net sales of 1.1 trillion yen, up 19% compared to 2020, with net income increasing 23.2% to 11.5 billion yen.
In January, the Tokyo-based group confirmed that it was in negotiations with CVC to sell the investment fund its personal care business, which includes shampoo, shower gel and skincare brands that are mainly distributed in Asia. According to Bloomberg, the price for the deal could be between 150 and 200 billion yen ($1.45 billion to $1.93 billion).
The negotiations are part of Shiseido's wider strategy to refocus on high-end cosmetics. The group hopes to be the global leader in this segment by 2030.
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