Shiseido's Strategic Overhaul Yields Profit Growth Amid Sales Decline

Japan's beauty conglomerate Shiseido Group has reported a notable 21.3% rise in core operating profit for the first half of 2025, signaling early success in its transformation strategy despite a 7.6% global sales decline to ¥469 billion (approximately £2.3 billion).

Divergent Regional Performance

The sales downturn was primarily attributed to sluggish consumer spending in China and ongoing challenges in travel retail channels. The Americas market saw a 10.1% year-on-year sales contraction, while EMEA recorded a 5.3% drop, with both regions facing competitive pressure from emerging brands like Drunk Elephant amid subdued cosmetics market growth.

Navigating External Headwinds

Escalating geopolitical tensions, global economic deceleration, and uncertainties surrounding U.S. tariff policies have collectively impacted the multinational's operations. The company noted these factors contributed to underperforming industry growth projections.

Structural Reforms Deliver Results

Under its "SHIFT 2025 and Beyond" midterm strategy, Shiseido achieved 3% global cost efficiencies through organizational restructuring and gross margin optimization. Targeted reforms in its domestic Japanese market proved instrumental in driving profitability.

Two-Year Revival Blueprint

The newly launched "Action Plan 2025-2026" outlines a dual-year roadmap focusing on brand portfolio consolidation, profitable business reconstruction, and enhanced operational governance. This initiative aims to establish a resilient business model capable of sustaining growth in volatile markets, targeting a 7% core operating margin by 2026. The first-phase reforms will prioritize foundational adjustments to secure long-term stability.