Recovery in Japanese market could boost Shiseido’s performance

By Katie Bird

- Last updated on GMT

Related tags Japan Shiseido

Hopes of a recovery in consumer spending linked to the election of the Democratic Party of Japan has led analysts to up the outlook for Japanese firm Shiseido’s domestic sales.

The company’s sales in the country dropped 7.9 per cent in the quarter ending June 30 as spending on consumer goods weakened in the country.

According to portfolio manager Koichi Ogawa from Daiwa SB Investments, as quoted in Bloomberg, domestic sales may increase from April when the new government is set to implement measures to spur consumer spend.

“Shiseido needs to take market share away from Kao Corp and other rival cosmetics markets in Japan,”​ Ogawa added.

Overall, the first quarter results for the company suffered significantly, with net income falling 57.8 percent.

Total sales were down 14.9 percent from the corresponding quarter the previous year coming in at ¥139,686 m ($1,510m), and overseas sales dropped 25.9 percent despite a strong performance in China.

‘Global player’

On publication of the results, the company reaffirmed its target to become a ‘global player representing Asia with its origins in Japan’.

The plan is to raise the proportion of international sales to 50 percent by 2017 from 38 percent last fiscal year with a specific focus on the Asian countries in particular China.

According to the company, China performed well this quarter although results were dragged down by weak European and North American results as well as the negative effect of the Yen’s appreciation.

The country has been a focus of recent attention for Shiseido with sales growing significantly in local currency terms and dedicated brands specifically aimed at Chinese consumers performing 'outstandingly'.

The company has attempted to enter new retail channels, increase the number of sales points and increase sales in existing outlets in the country over the past few years.

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