Shiseido’s share price has rallied after the beauty conglomerate reported a 22% rise in core operating profit in 2025 to ¥44.5bn.
Shares in the Nars and Clé de Peau Beauté owner soared as much as 15% after the earnings beat analysts' estimates and the company forecast a positive 2026.
Net sales fell 2.1% year-on-year to ¥970bn and 1.8% on a like-for-like basis, reflecting a decline in consumer spending in its China and its travel retail business, particularly in the first half of the year, as well as ongoing challenges with Drunk Elephant in its Americas business.
However, the company said sales returned to growth in the latter half of the year driven by the growth of key brands.
Despite the core operating profit growth, Shiseido recorded a loss of ¥46.8bn from goodwill impairment costs, largely as a result of declining profitability in its Americas business, where sales fell 9.5% on a like-for-like basis across the year.
Shiseido and Clé de Peau de Beauté beauty brands saw revenue growth year-on-year in the region, however, overall sales declines were weighted down by the ongoing challenges with skin care brand Drunk Elephant.
Make-up brand Nars also struggled, which the company said was primarily impacted by the differences in the timing of shipping deliveries.
Elsewhere, sales grew across EMEA, despite the challenges with Drunk Elephant.
Like-for-like sales were up 3.2% in the region, with new launches from Zadig&Voltaire and Narciso Rodriguez contributing to robust growth in fragrances.
Asia Pacific sales were up 1.8%, and sales in Japan were largely flat, while in its China and travel retail business, sales declined 3.5%, where it was “unfavourably impacted by the decline in consumer spending amid worsening economic sentiment”, Shiseido said in a statement.
However, “signs of recovery” were seen in the latter half of the year.
“While the impact of China [and] Japan was a concern, the FY25 core operating profit benefited significantly from changes to bonus assumptions and cost reductions in China travel retail,” said analysts at Jefferies, the investment bank.
“Amid various challenging external factors affecting the plan targets, the company exceeded its plan through internal initiatives.”
Shiseido said it is targeting core operating profit of ¥69bn in 2026, which would mark 55% growth on 2025, and sales of ¥990bn, a rise of 2%.
The beauty conglomerate has undergone a number of changes in recent years, including merging its travel retail and China operations.
The move was part of the group’s broader transformation plan to revive flagging sales.
This is centred around three objectives – reinforcing the brand’s foundation, rebuilding its profitability and enhancing operational governance.
In December, Shiseido unveiled plans to shake up its leadership structure in 2026, along with a series of company-wide organisational changes.
The group has also embarked on a turnaround plan for Drunk Elephant.