Financial focus: Shiseido, Kao, L’Occitane and more feature in our latest beauty business and finance update

1 – Laying the groundwork: Shiseido’s focus on ‘skin beauty’ pays off as Q1 2021 operating profits increase​

Japanese beauty giant Shiseido Group has reported an operating profit increase​ of 67.6% year-on-year to surpass US$100m after pivoting towards a focus on skin care following the COVID-19 outbreak.

In the first quarter of the 2021 fiscal year, the firm’s net sales grew 7.5% YoY to JPY244bn (US$2.24bn).

The sales were driven by the growth of the firm’s skin care brands and the growth of e-commerce, particularly in the prestige category.

This follow’s Shiseido’s strategy to focus on skin care and health to stay in line with the changing consumer needs and concerns post-outbreak.

2 – Accelerating recovery: Kao outlines plans to raise cosmetics business back up to pre-pandemic levels by 2023

Japanese conglomerate Kao Corporation is working to put its cosmetics division back on a path​ of high growth with a series of moves including ‘structural reform’ and ramping up marketing spend.

The firm’s cosmetics business suffered net sales losses of 14.7% on a like-for-like basis and its operating margin fell by 5.9% – a consequence of the pandemic impacts in Japan and Europe.

The impact on the cosmetics business was also greater because of its higher ratio of make-up products, which is approximately 10% higher than the market.

The base and lip make-up categories continued to suffer because of the change of consumer habits such as mask-wearing.

3 – L’Occitane Q4 results: China now firm’s largest market after sales surge by 60%

Staggering fourth-quarter growth of 60% has propelled China​ to become L’Occitane International’s largest market in FY2021.

L’Occitane International is the parent company of six brands – L’OCCITANE en Provence, Melvita, Erborian, L’OCCITANE au Brésil, LimeLife by Alcone and ELEMIS.

The Hong Kong-listed company reported that its sales accelerated to 12.5% in the fourth quarter of its 2021 financial year ending March 31.

This was driven by double-digit growth across all key brands, L’OCCITANE en Provence, ELEMIS and Limelife, which grew 10.2%, 24% and 29.2% respectively at constant rates.

4 – End of an affair: Shiseido partially terminates global license with D&G to focus on 2023 targets

Japanese beauty major Shiseido has announced that it will partially terminate the exclusive global license​ with Dolce & Gabbana regarding the product development, manufacturing, distribution and marketing of its beauty products.

The Dolce & Gabbana (D&G) license was managed by Beauté Prestige International, which is in charge of the global fragrance business under Shiseido Group EMEA.

The license termination, which is subject to specific closing conditions, would be effective for all activities and markets, with the exception of activities carried out from France, from December 31, 2021.

According to Shiseido, the license termination in France is under discussion to consider the option given by Dolce & Gabbana, and proper local information and consultation processes with employee representatives will occur in full alignment with French labour law.

5 – Make-up ‘renaissance’: How Estée Lauder expects colour to trend based on China’s COVID-19 recovery

Beauty major Estée Lauder Companies has revealed how the rapid recovery of colour cosmetics in China has informed its global make-up strategy​.

While the effects of the COVID-19 pandemic continued to disproportionately impact makeup usage, with net sales declining across nearly all its brands, the company is preparing to welcome a make-up ‘renaissance’.​

“Looking ahead, we are preparing a renaissance in make-up, and we anticipate that momentum will gradually build around the world, driven by local reopening and social and professional occasions,” ​said Fabrizio Freda, president, CEO and director of The Estée Lauder Companies.

“We are strategically well-positioned to grow our sales and capture prestige beauty share make-up recovery with our hero products, robust innovation pipeline, analytics engine, driving aspirational intelligence, and enticing in-store and online activation centred on the omni-channel consumer.”​