Weakness in Japan pushes Shiseido sales down

By Guy Montague-Jones

- Last updated on GMT

Related tags: Revenue, Generally accepted accounting principles, Shiseido

Japan-based Shiseido has reported falling turnover in the first quarter after sales in the domestic market plummeted.

Net sales dropped 5.4 percent to ¥164.1bn for the three months ending June 30 largely because of a 9.3 percent fall in Japanese sales.

Shiseido said intensified competition and lower consumer confidence were to blame.

Lower domestic sales drag down total

The domestic market makes up around 60 percent of total sales and so declining fortunes there have a major impact on the overall performance of the company.

Elsewhere in overseas markets Shiseido has met with more success. Sales in other Asian countries were particularly strong rising 7 percent on last year.

Sales in Europe were also on the rise but American sales fell somewhat.

The weak dollar and the deteriorating retail environment are making it difficult for international companies to achieve growth figures in the US.

Shiseido has recently announced the consolidation of its businesses in the country and the appointment of a new head of US operations.

These changes form a segment in broader plans to become a more global player with a greater proportion of sales coming from oversees.

The measures are also designed to increase efficiency and therefore improve profitability.

Operating profits down but net income rockets

Shiseido’s margins are currently laboring under the weight of higher raw material prices which contributed to a 21.2 percent fall in operating profit for the second quarter.

Despite the fall Shiseido recorded a dramatic increase of 406.3 percent in net income as a result of a lower tax burden taking the total figure to ¥10.26bn.

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