Shiseido’s first quarter of trading in 2026 got off to a rocky start as group sales decreased 3% to ¥232bn compared with the same quarter last year.
The Japanese beauty conglomerate, which owns skin care brand Drunk Elephant and make-up business NARS, attributed the sales declines to ongoing tensions between Japan and China.
This was triggered in November 2025 following comments from Japanese Prime Minister Sanae Takaichi, who said during a parliamentary meeting that a Chinese invasion of Taiwan could trigger a Japanese military response.
The impact of the tensions remained “within expectations”, but resulted in a 1% decline in Shiseido’s China & Travel Retail segment.
Overall net sales also declined due to timing shifts in some brands, along with inventory adjustments, but profits fared better, jumping 58% to ¥13bn.
In the US, net sales were reported at ¥29.6bn, a 5.1% increase compared with Q1 2025.
This was supported by strong consumer purchase rates, with Shiseido’s own-brand reporting bumper sales of Vital Perfection, while NARS returned to positive growth in the region.
Shiseido CEO Kentaro Fujiwara’s annual pay has been revealed by Cosmetics Business. Find out more here.
Drunk Elephant has also shown signs of recovery, despite sales decreasing 14% during the quarter, as the embattled skin care brand's year-on-year sales decline narrowed in Q1.
This follows Drunk Elephant unveiling a new campaign and brand direction in January 2026 in an attempt to shrug off its association with 2024’s ‘Sephora Kids’ drama.
This saw tweens rampaging through US Sephora stores in January of that year, trying and buying goods while leaving chaos in their wake – including Drunk Elephant’s high-active concentrate formulations.
The resulting fallout and identity crisis triggered multiple consecutive quarters of declining sales, dragging down income at Shiseido in the process.
Shiseido has maintained its desire to turn Drunk Elephant around, including a plan to drive increased engagement through brand ambassadors, partnerships and creator community to “generate advocacy”.
Supporting this is a strategy to regain market leadership through the launch and promotion of “unrivalled” hero products.
Shiseido gives an update on the Middle East situation
Shiseido also provided an update on the ongoing conflict in the Middle East, which has impacted the financial results of beauty conglomerates across the globe.
The Japanese brand owner stated it is currently monitoring raw material and logistics cost pressures, along with supply chain risks, including production delays.
This has been reflected in Shisiedo’s full-year 2026 outlook, which anticipates a decline in sales in the Middle East, along with rising raw material and logistics costs.
The announcement was made alongside Shiseido's revealing plans to optimise its global production network by closing the Hsinchu Factory of its consolidated subsidiary, Taiwan Shiseido.
Production will be transferred to the company’s domestic base in Japan.
Shiseido anticipates the move will “enhance global capacity utilisation and improve cost efficiency”.
The decision is part of the conglomerate's 2030 Medium-Term Strategy announced in November 2025, which aims to achieve sustainable growth by maximising brand value.
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