Shiseido has dramatically cut its full-year outlook for 2023 due to a challenging business environment in China and weak travel retail sales.
The Japanese beauty conglomerate said it has experienced slower demand from its Chinese consumers, with them pulling back on Japanese products in China and travel retail.
This is following Japan’s release of treated radioactive water into the Pacific Ocean from Fukushima’s disabled Daiichi Nuclear Power Station in August.
Shiseido curtailed marketing activities and suspended promotions during this time.
The company now expects to achieve a core operating profit of ¥35bn (US$231m) for the year ending 31 December 2023 – a 42% reduction from its previous estimate.
It has also cut its revenue forecast by 2% to ¥980bn.
Shiseido’s operating profit dropped 28% to ¥25.8bn in the nine months ended 30 September 2023 compared to the previous year.
Revenue for the period also fell 5.3% to ¥722bn.
Sales in China and the travel retail market both fell around 10% in the third quarter.
The company said retailers offloading inventory has also impacted its performance.
Although the Fukushima wastewater release meets global safety standards – nuclear watchdog the International Atomic Energy Agency confirmed the plan – it has drawn the ire of some of Japan’s top trading partners.
Shiseido expects the wastewater release to continue to impact its business into the first quarter of 2024.
“The impact of the wastewater is temporary and we anticipate it will return to normality by the end of first quarter in 2024,” said Shiseido COO Kentaro Fujiwara.
“We will closely monitor future changes in the market and aim to respond quickly.”
Shiseido has recently made a big play for India's prestige beauty market after spying potential growth in the region.
The Japanese conglomerate has ramped up its presence in the country by opening its first standalone store in Mumbai.
This retail expansion followed the appointment of its first Indian brand ambassador, Bollywood star Tamannaah Bhatia.