Shiseido powers ahead as prestige brands send sales surging 9%
Two years ago, Japan’s Shiseido hit the 1 trillion yen mark, a target originally set for 2020, and last year’s results continued to impress with the cosmetics group’s net sales, operating profit and net profit all reaching record highs.
The owner of beauty brands including Bare Minerals, Nars, Laura Mercier, and a host of Chinese labels said its prestige portfolio helped drive an 8.9% increase in consolidated sales to 1.09 trillion yen ($9.9bn) during the year ended 31 December 2018. On a local currency basis, net sales grew 8.8%.
The company makes the majority of its revenues in Japan and China, together accounting for almost 60% of net sales last year. Japan’s economic improvement and China’s strength delivered strongly for the group. China, in particular, was one of Shiseido’s fastest growing businesses last year, with sales rocketing by 32.3%, only second to the travel retail business which grew 34.7%.
The Asia-Pacific region also grew strongly, up 13.9%, while a mixed performance across Europe resulted a 4.3% rise in EMEA sales. Finally, growth slowed in the Americas, with sales down 1.8% on the previous year.
Shiseido is on a mission to ensure its future for the next 100 years. In addition to shifting all of its activities towards a consumer-oriented focus, the company is expanding its market share in the prestige beauty market and driving growth through innovation.
These strategies, plus significant marketing efforts in China, Japan and the travel retail business, are helping the business sell more, while improvements in the cost structure are making the company more profitable. In 2018, operating profit grew by 34.7% to 108.4 billion yen ($986.5m), helped by a 9.9% increase in consolidated operating margin, while net profit rose by an impressive 169.9% to 61.4 billion yen ($555m).
This month, the Japanese group revealed it will invest up to 50 billion yet in three new manufacturing plants in Japan, as it looks to further expand its production capacities to meet growing demand.
2019 is expected to be another stellar year for the company, which forecast consolidated net sales to reach 1.17 trillion yen ($10.6bn). Operating profit is expected to be 120 billion yen ($1.09bn) due to higher margins and sales growth, while net profit will rise to 75.5 billion yen ($687.8m), according to the forecast.
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