Shiseido sees net profit shoot up 16% in first quarter

The Japanese cosmetics manufacturer announced on Tuesday that its net profit rose 16% in the first quarter thanks to strong sales in Japan and China, progress which allowed the company to confirm its annual outlook. 

In the January-to-March period, Shiseido's net profit totalled 33.5 billion yen ($304 million in line with the exchange rate defined by the group), while revenues were 273.6 billion yen ($2.5 billion) up 3.7% compared to the prior-year period. 

The company's operating profit, on the other hand, decreased by 17.4% to 38.9 billion yen, due to "increased investments in marketing, R&D, and people," the group explained in a release. 

Shiseido, which owns a number of luxury beauty brands, including its namesake Shiseido label, Clé de Peau Beauté, NARS, Laura Mercier and Dolce & Gabbana, highlighted strong demand in Japan, "supported by the continued increase in overseas tourists" from Asia. However, the group also lamented business lost after "Revital wrinkle-lift cream and other products ran out of stock."

Shiseido's domestic revenues account for close to 42% of its sales, making Japan its largest market, ahead of China (19%), where sales rose 15% in Q1, driven by e-commerce. The situation was a little more complicated in the company's Americas region, which accounts for 10% of its sales and where the group's BareMinerals brand is currently "in the process of closing unprofitable boutiques and other structural reforms."

The company's duty free stores also posted increases in revenues. Following this strong first quarter, which was in line with Shiseido's expectations, the group has maintained its optimistic forecast for 2019. The company expects revenues to increase 7% to 1,172 billion yen ($10.6 billion) and net profit to shoot up 23% to 75.5 billion yen, while operating profit is predicted to jump 11% to 120 billion yen.