THE WHAT? Shiseido has announced a Q1 net profit drop of 95.8 percent, a tumble attributed to the fallout from the COVID-19 pandemic, according to a report by WWD.com.
THE DETAILS The Japanese beauty giant reported a net profit of 1.4 billion yen for the three months ending March 31, as opposed to the net profit of 33.5 billion yen reported in the corresponding period last year.
Operating profit also plummeted, dropping 83.3 percent to 6.5 billion yen from 38.9 billion yen the previous year.
Taking to a statement, Shiseido said the fall was due to, “a drop in margins resulting from lower sales and unfavorable product mix outweighed prompt cost-saving measures in response to the rapid deterioration of the market environment.”
All eight of the company’s business arms reported losses while regionally Japan, it’s biggest market, saw sales fall 21.2 percent, China sales were down 15.2 percent and Asia-Pacific dropped 20.3 percent to 15.1 billion yen. E-commerce sales within China rose 25 percent during the period while Shiseido Americas slid 15.9 percent.
The company has withdrawn its full year guidance for the fiscal year ending 31st December, 2020, stating, “Going forward, business results are still subject to uncertainties, such as the viral spread and the timing of resumption of economic activities due to regulatory measures taken by each country. It is currently very difficult to assess trends and the impact of these uncertainties.”
THE WHY? Shiseido placed the lion’s share of the blame on COVID-19. Talking about its Japanese arm the company said, “The Japan business saw consumption sentiment decline due to the spread of COVID-19 and the resulting tendency to stay at home as well as shortened operating hours or temporary closures of retail stores. This adversely affected sales, mainly for prestige and cosmetics brands. In addition, a sharp decline in the number of foreign tourists to Japan led to a significant drop in in-bound demand.”