What's Happening?
Shiseido, a prominent Japanese beauty company, has reported a 4% decrease in net sales for the third quarter of 2025, amounting to ¥693.8 billion, compared to ¥722.8 billion in the same period of 2024.
The decline is attributed to reduced sales in China, travel retail, and the skincare brand Drunk Elephant. Despite these challenges, Shiseido's core operating profit increased by 10% to ¥30.1 billion, aided by global cost management and structural reforms. The company faced a one-off impairment cost, including a goodwill impairment loss of ¥46.8 billion in the U.S. and expenses related to structural reforms and early retirement programs. Shiseido aims to revitalize Drunk Elephant with a new campaign and increased engagement through brand ambassadors and partnerships. The company has lowered its full-year outlook for 2025, anticipating net losses of ¥52 billion.
Why It's Important?
The decline in Shiseido's sales highlights the ongoing challenges faced by international beauty brands in the Chinese market, which is a significant revenue source. The company's efforts to restructure and revitalize its brands, particularly Drunk Elephant, are crucial for maintaining competitiveness and profitability. The strategic focus on brand ambassadors and innovative campaigns reflects the industry's shift towards digital engagement and personalized marketing. Shiseido's lowered financial outlook indicates potential impacts on investor confidence and market positioning, emphasizing the need for effective turnaround strategies.
What's Next?
Shiseido plans to launch a disruptive campaign for Drunk Elephant in January 2026, aiming to improve profitability and market presence. The company will continue to focus on brand engagement and the promotion of hero products to regain market leadership. The restructuring of its travel retail and China operations, including leadership changes, is part of a broader transformation plan to revive sales. Stakeholders will be watching closely to see if these initiatives can reverse the current sales decline and enhance Shiseido's market position.
Beyond the Headlines
The challenges faced by Shiseido underscore the broader issues in the beauty industry, such as the impact of geopolitical tensions and changing consumer preferences. The company's focus on structural reforms and digital engagement reflects a shift towards more sustainable and adaptive business models. The success of these strategies could influence industry standards and practices, particularly in terms of brand management and market adaptation.
