Shiseido scraps its forecasts for 2020
May 13, 2020
Japanese cosmetics giant Shiseido, a brand highly dependent on the Asian market and Chinese tourists, has seen its financial results collapse in the first quarter of 2020 due to coronavirus, forcing it on Tuesday to abandon its initial annual forecast.
Shiseido managed to stay in the green during this past financial quarter but, with a net profit of 1.4 billion yen, just over $13 million, this is a staggering year-on-year fall of 96%.
The brand’s quarterly operating profit fell by 83.3% to 6.5 billion yen while its revenue fell by 17.1% to 226.9 billion yen in the same time period.
It was in the Japanese market, which represents over a third of its total turnover, that Shiseido was hit the hardest. The brand’s revenue fell by 21.2% in Japan, even more than it fell in China where revenue dropped by 15.2%. An increase in online sales had managed to absorb the shock in the Chinese market.
The brand’s quarterly sales also plummeted by 15.9% in its Americas zone and by 18.3% in its Europe-Middle East-Africa zone as the US and Europe began lockdown measures in March.
In ‘travel retail’ (boutiques located in airports), an important segment for the group, the drop in sales was limited to 3.1% during the first financial quarter.
Due to the great lingering uncertainties about the duration of the pandemic and the extent of economic recovery in different countries, Shiseido has abandoned its forecast for 2020 and plans to formulate a new one when its results for the first half of the financial year are published in early August.
Shiseido had initially expected a net profit of 77.5 billion yen this year, which would have represented a 5.4% increase compared to 2019.
The brand had also predicted an annual turnover increase of 7.8% to reach 1,220 billion yen.
In order to ensure that it had sufficient liquidity, the group has set up an additional line of credit of 200 billion yen and it plans to significantly limit its industrial investments this year. Shiseido may also consider selling certain assets, its president and group CEO Masahiko Uotani hinted during an online press conference.
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