Shiseido has reported a significant financial loss for the second consecutive year, impacted by declining sales in China and a poorly performing US acquisition.
Shiseido has struggled with poor financial performance, marking its second consecutive year of losses. The company's recent report indicated a net loss of 40.6 billion yen for the fiscal year ending December 2025, which is one of the largest losses in its history. This downturn has been exacerbated by a 2.1% year-on-year drop in revenue, totaling approximately 969.9 billion yen. Significant factors contributing to this situation are the underperformance in their US operation and a slowdown in sales catered to Chinese consumers.
The company's troubles in the US stem from its 2019 acquisition of the emerging US brand, Drunk Elephant, which was hoped to drive growth through effective social media marketing aimed at younger demographics. However, this target has not materialized as expected, with projected shipments for 2024 anticipated to plunge over 30% from the previous year, and further declines of 39% for 2025. Analysts attribute this slide to previous production issues in the US, which allowed similar brands to capture market share during a critical period for Drunk Elephant.
In light of these financial struggles, Shiseido has had to write down the expected value of Drunk Elephant, leading to a significant impairment loss of 46.8 billion yen. This adjustment is reportedly a primary reason for the latest report of net losses. Given the high stakes of international business and the current geopolitical climate, including the deterioration of Japan-China relations, Shiseido faces further challenges as it attempts to stabilize and grow its market presence in both traditional and emerging markets.
