Shiseido nine month results show big sales drop

By Simon Pitman

- Last updated on GMT

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Global cosmetics giant Shiseido showed a big drop in sales for the first nine months of the year, as consumers switch to cheaper brands.

Sales for the nine months up to 31 December fell by 10.4 percent to ¥464.63bn ($5.14bn), compared to ¥518.50bn in the corresponding nine months of 2008.

Breaking this figure down, the results showed that domestic sales fell by 7.2 percent to ¥301.79bn, whereas the fall was even more pronounced for its international sales, which fell by 15.8 percent to ¥162.84bn.

International results hit by currency translation

The international results were impacted significantly by currency translations, which meant that international currency sales actually fell by just 0.9 percent, but when translated into yen it added a further 14.9 percent impact.

The company said that it had come up against ‘continuing economic stagnation’ during the quarter, underlining that there had been no signs of a recovery in consumer sentiment in Japan, while overseas conditions were generally weak.

As a result operating income fell by 12.6 percent for the period to ¥32.62bn, compared to ¥37.31bn for the same period last year, while net income increased by 11.2 percent to ¥23.69bn.

Income tax break helps to boost profits

The company said that the rise in its net income was mainly attributable to a year-on-year decline in its tax expenses.

The company reaffirmed its full year results, estimating that total sales will fall by 5.8 percent to ¥650m, while net income will increase by an estimated 60 per cent to ¥31m.

Market experts are predicting that the Japanese consumer market could recover in 2010, following the election of a new government, the Democratic Party of Japan.

Likewise, the company is set to buy growing mineral make-up provider Bare Escentuals in a $1.7bn which analysts believe could help to improve its international sales in the course of the next financial year.

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