On August 6, the company announced that its second-quarter sales dropped by 32.6% year-on-year to JPY190.9bn (USD1.8bn), resulting in operating losses amounted to JPY 9.9bn (USD93.7m).
The company’s first-half net sales fell 24.7% year-on-year to JPY417.8bn (USD3.95bn) while operating costs fell by JPY72.4bn (USD685m), amounting to a loss of JPY3.4bn (USD32.17m). Net profit decreased by JPY73.8bn (USD698m) to negative JPY21.4bn (USD202,587).
The maker of SHISEIDO attributed these losses to the severe market conditions brought about by the pandemic.
Representative director, president and CEO Masahiko Uotani expressed that the management would be undertaking urgent reforms to return the company to profitability under the WIN 2023 initiative.
“I strongly feel a sense of urgency and we will strike to achieve full recovery of the business by 2023 by implementing reforms with unwavering resolve,” said Uotani, who was recently appointed chairman of the company’s Global Transformation Committee to combat COVID-19.
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Focus on skin health
As part of its reform plans, Shiseido plans to fall back on its expertise in skin care to capitalise on consumer interest in health and wellness.
“The skin is a barometer for health and it’s closely linked with mental and physical health and vitality, influenced by diet, sleep and living environment. It is considered that beauty and wellness will merge further going forward,” said Uotani.
The three-year plan business plan would entail doubling down on its focus on skin care and skin health. The segment would include gadgets, dietary supplements and personalised services.
Uotani envisions that Shiseido will emerge from this health crisis as a ‘skin beauty company’ with offerings to help consumers achieve healthier skin.
“The concept of beauty internally and externally is based on oriental ideas, such as those from China and Japan. To compete globally, this is a very important and differentiating strategy for Shiseido,” said Uotani.
By furthering portfolio enhancement through inhouse development, open innovation, and strategic mergers and acquisitions, the company is aiming to increase skin care sales ratio from 60% to 80% by 2023.
At the core of this strategy are the company’s made-in-Japan brands such as SHISEIDO, Clé de Peau Beauté, IPSA, Elixir and Anessa.
Uotani highlighted the potential of its flagship brand SHISEIDO and its Ultimune range which was developed base on immunoscience.
“SHISEIDO has become a representative consumer brand of Japan that is now JPY200bn yen in size… We want to grow it into a JPY300bn brand in the future.”
The company also hopes to accelerate the global development of brands such as Drunk Elephant, which was acquired by the company last year for USD845m.
This would include the gradual launch of the brand from next year onwards to key countries in Europe, Japan, China, South Korea, Mexico, Brazil and travel retail
Additionally, the company plans to expand the sales footprint of BAUM, a luxury sustainability-based brand it launched in May this year. The company will begin the expansion of BAUM with China in 2021.
Uotani concluded: “We will not hold back from this crisis, but all our employees will work together to overcome and win this battle against COVID-19. We will solve our challenges to achieve a full recovery and we are determined to realise and achieve record-high profitability.”
