Japanese cosmetics giant Shiseido is determined to bounce back from a challenging fiscal year in 2023 by focusing on revitalizing sales in China and the travel retail channel. These two areas were major contributors to the disappointing results recently published by the company.
Shiseido is optimistic that its sales in China will experience a rebound and grow by 5% in 2024. China is a crucial market for the cosmetics group, but it suffered an unprecedented decline in revenue during the second half of 2023. This decline can be attributed to the negative impact of the Tokyo government’s decision to discharge wastewater from the damaged Fukushima nuclear reactor into the Pacific Ocean. The decision triggered a boycott of Japanese products, particularly cosmetics, by Chinese consumers.
Although Shiseido expects the negative impact on its Chinese business to continue in the first quarter of 2024, it anticipates that the sales will start to grow again in the second quarter of the year.
For fiscal 2024, Shiseido has projected a 1.1% increase in net income to JPY22 billion (€136.7 million) and a 2.8% increase in revenue to JPY1 trillion (€6.2 billion). In 2023, the company’s net income fell by 36.4% to JPY21.7 billion, mainly due to one-time negative effects related to the sale of two factories and the merger of two others in Osaka. The company’s annual revenue in 2023 also decreased by 8.8% to JPY973 billion, as strong sales growth in Japan and other regions did not offset the shortfall in China and the travel retail channel.
The travel retail sector in Asia has faced challenges since last year due to stricter regulations implemented in China and South Korea. These regulations have impacted the sale of products in duty-free stores, including those in Hainan Island, which is known as China’s duty-free paradise.
Overall, Shiseido remains hopeful that fiscal 2024 will be a turning point for the company, with a revival in sales in China and the travel retail channel. The company’s success in these areas will be crucial for its long-term growth and financial performance.