Japanese beauty house Shiseido’s travel retail sales fell -23.8% year-on-year (like-for-like, 18.6% reported) in 2024 to ¥107,834 million (US$708.5 million) with a reduced -9% like-for-like decline in Q4 amid deeply challenging circumstances in the key Hainan and Korean channels.
Announcing its annual results, Shiseido said travel retail’s core operating profit declined -70.7% to ¥5 billion (US$32.8 million) due to a drop in gross profit driven by lower sales.
“In the overseas cosmetics market, the trends and pace of growth were mixed across regions. The duty-free retail market including Hainan Island continued to face challenges amid deceleration in consumer spending driven primarily by Chinese tourists, while the impact of retailer inventory adjustments in response to tighter [daigou-related] regulations had receded steadily over the period,” the company said.
Groupwide net sales for the year rose +2% year-on-year to ¥990.6 billion (US$6.5 billion). However, operating profit plummeted -73% to ¥7.6 billion (US$49.9 million) driven largely by challenges in the soft Chinese local market and the North Asia travel retail woes.
“China’s cosmetics market suffered a prolonged downturn, weighed down by a decline in consumer spending and rising household savings amid worsening economic sentiment,” Shiseido said.
In Q4, travel retail sales declined -8.1% year-on-year (-8.8% like-for-like) to ¥22 billion (US$144.7 million) with a core operating loss of ¥0.3 billion (US$1.9 million). Travel retail represented 8.2% of group net sales in the quarter, down from 9.6% in the same period a year earlier.
In Hainan, sales fell by a mid-teen percentage year-on-year in Q4 but by over -30% for the full year. South Korea was an equally grim tale with revenue down by a high twenties percentage in Q4 and more than -30% in the full year.
Japan, on the other hand, buoyed by the weak Yen which spurred a boom in visitor numbers, saw sales rise over +60% year-on-year during 2024 and more than +30% in Q4. Americas and Europe, Middle East & Africa travel retail sales rose by a low single-digit percentage in Q4 and a high-single one across the 12 months.
The company said its growth strategy in the channel for 2025 would be based on “rebuilding a sustainable business foundation”.
In Japan and western countries, the company plans to enhance synergies with local markets while targeting non-Chinese travellers. In a euphemistic description of continuing to move away from the reseller business Shiseido said it would shift its focus “on growth driven by tourists”. ✈
