Japanese cosmetics giant Shiseido Co. reported a dramatic 96% drop in nine-month profit as Chinese tourists cut back on duty-free shopping and domestic production issues hampered sales in the Americas.
Net income fell to ¥754 million ($5 million) in the January-September period from ¥20.5 billion a year earlier, the Tokyo-based company said Thursday. Sales remained flat at ¥722.8 billion.
The company slashed its full-year profit forecast by 73% to ¥6 billion, citing persistent weakness in Chinese consumer spending and slower-than-expected recovery from production delays in its Americas business. The revised outlook represents a 72% decline from the previous year.
Travel retail revenue, a key profit driver for Shiseido, tumbled 21% as Chinese tourists reduced spending at duty-free shops in Hainan Island and South Korea. The China business posted a 2.4% sales decline amid what the company called “worsening economic sentiment.”
The struggling performance contrasts with Shiseido’s domestic market, where sales rose 10% thanks to strong demand for high-end brands like SHISEIDO and Clé de Peau Beauté. The company completed its acquisition of Dr. Dennis Gross Skincare in February for ¥65.4 billion to expand its U.S. presence.
Core operating profit dropped 26% to ¥27.4 billion, while operating profit plunged 91% to ¥2.2 billion after booking restructuring costs related to early retirement programs.
