‘Sales greatly declining’: Shiseido braced for Europe and Americas COVID-19 downturn as China shows signs of recovery
At the start of the year, Shiseido was on track to reach its goals of hitting record-breaking financial highs in the last year of its VISION 2020 plans.
A year that should have been a victory lap is now being threatened by the rapid global spread of COVID-19.
The biggest uncertainty today is the group’s business in Europe and the Americas, where the virus has been spreading at an alarming rate.
“COVID-19 is now expanding at a significant speed in Europe and the Americas. It has now become definite that the original company plans will be negatively affected,” said president and CEO Masahiko Uotani during a shareholders meeting on March 25.
The accelerated spread of COVID-19 has resulted in lockdowns across the continents, causing mass store and factory closures while people have retreated into confinement.
“It’s a very unfortunate situation that has a great impact on our company’s business as well. The number of customers visiting our stores is declining and the sales are greatly declining as well,” said Uotani.
He added that the company was also concerned about the manufacturing and supply chain issues brought about by these lockdowns.
“For manufacturing and supply chain in Japan and China, it’s not that big of an issue right now but we are concerned about the closure of plants and factories in Europe and the Americas.”
China on road to recovery
On the other hand, the company has observed a tremendous recovery in China, where COVID-19 is believed to have originated.
Currently, over 90% of the firm’s business partners have resumed operations after heavy restrictions placed on many Chinese cities.
Uotani credited the recovery to the resistant e-commerce business. “In China, where e-commerce is very developed, there has actually been significant growth due to people shopping during the lockdown. Our company’s products and sales are growing in China through that method.”
Executive officer and China region CEO Kentaro Fujiwara revealed that in February, the China e-commerce business exceeded the previous year’s performance and continued to grow in March.
To maximise its opportunities on e-commerce, the firm plans to reinforce its relationship with Alibaba, a Chinese e-commerce platform.
“We are preparing to make sure we make a big recovery in China,” said Fujiwara.
“We cannot just fear the risks”
Uotani also announced several more key initiatives to protect the company from the harsh business environment.
He said the firm would continue to support its small and mid-sized partners such as speciality stores by letting them delay payment.
Additionally, marketing activities would be pared down as the pandemic continues to develop. However, the firm has prepared new marketing activities such as product launches to make a comeback once the market is ready.
Uotani highlighted, however, that the company can expect a lot of uncertainty moving forward.
“How much will this pandemic expand and how long; there is nothing we can foresee. The company is investigating and analysing what impact it would have for the business. But please do understand there's nothing we can clearly mention at this point.”
Uotani announced that the firm will disclose a revised version of its 2020 plan at the end of the first quarter to reflect the impact of COVID-19 on the business. Additionally, it will unveil its 2021 to 2023 growth plan at the end of 2020.
“In this unseen environment we will continue to have transparency and communication and be proactive in talking to shareholders about the company’s situation,” said Uotani.
He concluded: “We cannot just fear the risks and stay small. We will continue to face these temporary challenges like COVID-19 and aim for long-term growth and further enhancement of the company as well as corporate value.”