Beauty Giant Shiseido Seen Likely to Post Gains on China Cosmetics Demand

Update: Shiseido announced that net income for the first half of 2018 more than doubled compared with the year-earlier period, in part due to a 35.3 percent climb in net sales in China. The company also racheted up its net income forecast for 2018 as a whole.

The Japanese cosmetics giant Shiseido will release its earnings on Wednesday, August 8 and Wall Street is expecting a pretty result. Moreover, the announcement comes just before the global launch of the firm’s largest new product line in years.

Shiseido’s predicted second-quarter earnings results of 22 cents a share (24.88 yen) would be double the year-ago quarter’s 11 cents (12.03 yen). If achieved, those earnings would signal a turnaround for the brand. Early this year it reported a 30 percent slump in 2017 profit due to brick-and-mortar problems at its U.S. division Bare Essentials. The weakness in U.S. store sales, however, is being offset by soaring demand for the company’s products in China, particularly for its anti-aging products.

“The key [to improved sales] is having a cross-border marketing team,” said Shiseido CEO Masahiko Uotani in an interview earlier this year. Concentrating more on “travel retail” and on “prestige” products has also been part of the company strategy.

Founded in 1872, and entering the booming Chinese beauty market more than a quarter-century ago (before rivals), Shiseido is nonetheless enjoying popularity with millennials. Unlike other decades-old luxury cosmetic brands, it has been able to attract the younger consumer in part, it’s because of an aggressive marketing strategy using Key Opinion Leaders and outlets such as “Lisa’s Beauty Blog” and “Beauty Buy Buy Buy” to promote products. In general, the Shiseido campaigns have achieved higher-than-average engagement rates.

The earnings news comes as the company introduces a huge new cosmetics line I n September. The line introduces 21 new products in four texture categories—“Gels, Inks, Powders and Dews”—and 125 shades. The texture angle is something of a fresh idea in packaging and marketing beauty products, and a packed preview party was held at TOLOT, a contemporary art gallery in Tokyo earlier this month.

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Beauty & Health