Beauty care sales struggle at Kao

By Guy Montague-Jones

- Last updated on GMT

Related tags: Cosmetics, Kao

Kao Group is aggressively promoting mega brands in order to stimulate flagging cosmetics sales.

The Japan-based company reported a 3.7 percent dip in beauty care sales to ¥300.1bn ($3.10bn) for the six months ending September 30. Adverse currency effects dragged the figures down but even excluding these, sales would have fallen 1.5 percent.

Prestige sales suffer

Prestige cosmetics are largely responsible for the beauty woes. Sales in the category fell 4.7 percent to ¥146.8bn and ¥1.8bn was taken off operating income resulting in an operating loss of ¥8.6bn.

Sales in the domestic Japanese market dropped 1.2 percent to ¥221.6bn. Kao said sales products priced in the ¥2,000 to ¥5,000 range were particularly sluggish.

In order to turn this trend around, Kao is investing in the creation of big brands.

The company recently launched the whitening brand Blanchir Superior. In the color cosmetics category, Kao created the Sofina Primavista base make-up brand and extended the Coffret D’Or counseling brand.

Mixed picture overseas

Looking beyond the domestic market, sales in the rest of Asia were strong but in North America and Europe turnover was down.

Cooling consumer sentiment and intense competition were cited as reasons for the poor performance in Western markets.

Lower overall sales put downward pressure on operating income which fell ¥0.5bn to ¥9.4bn.

Meanwhile overall group sales increased moderately by 0.5 percent to ¥657.905bn and operating profit decreased ¥0.8bn to ¥54.7bn.

Kao said the company is on-track to achieve its previously announced sales and operating profit growth forecasts of 0.9 percent and 0.6 percent respectively for the financial year ending March 31.

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