Shiseido Moves Into Black, Sells Professional Business to Henkel
TOKYO — Shiseido moved back into the black last year on the back of double-digit sales growth. The results come as the company intensifies its focus on “skin beauty.”
Separately, Henkel is to acquire Shiseido’s Professional hair business in the Asia Pacific region. After the transaction closes, Shiseido is to retain a 20 percent stake in the legal entity based in Japan.
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For the year ended Dec. 31, Shiseido’s net profit totaled 42.44 billion yen ($367.6 million), compared with a net loss of 11.66 billion yen in the year prior.
Its operating profit for the year more than doubled, coming in at 41.59 billion yen, up from 14.96 billion yen in the previous year.
Japan’s largest cosmetics company saw its annual net sales grow by 12.4 percent to 1.04 trillion yen.
As Shiseido works to strengthen and grow its “skin beauty” business, skin care now accounts for 64 percent of its sales, representing growth of more than 10 percent. In terms of sales channels, its e-commerce sales have grown by more than 20 percent, now representing 34 percent of the total.
The company said it was able to achieve strong growth in overseas markets, particularly the U.S. and Europe, offsetting a decline in sales in Japan, where market conditions remain difficult. Total international sales for the company grew by 19 percent.
Shiseido’s Americas business grew by 32.8 percent in 2021, totaling 121.37 billion yen. The company’s EMEA (Europe, Middle East and Africa) business posted sales growth of 24.1 percent, coming in at 117.04 billion yen. The company’s sales also remained strong in China, where they grew by 16.5 percent to 274.72 billion yen.
“In the Americas, while impacts from the spread of COVID-19 continued, vaccination rollout drove the recovery of the cosmetics market, including makeup, which had struggled. In this market environment, U.S.-based skin care brand Drunk Elephant opened new doors, while Nars grew its share due to virtual store openings and other digital marketing initiatives. In addition, Shiseido, Clé de Peau Beauté and fragrance brands also performed well on the back of strengthened promotions,” the company said in a release.
In its home market of Japan, Shiseido’s sales dropped by 8.9 percent to 276.17 billion yen, due mainly to a fall in inbound demand resulting from the border closure, and to an extended state of emergency that discouraged people from going out.
Shiseido also released its forecast for its current fiscal year. It expects a 5.7 percent decline in net profit, for a total of 40 billion yen.
The company is predicting its yearly operating profit will grow by 44.3 percent to 60 billion yen.
It is forecasting net sales growth of 6.3 percent on the year, totaling 1.1 trillion yen.
Meanwhile, Shiseido said its professional hair business, which delivers hair care, color, perm, straightening and styling products to salons in the Asia Pacific region, would be sold to Henkel for 12.3 billion yen.
In the most recent fiscal year, Shiseido’s Professional business saw its sales increase by 24.4 percent, totaling 15.86 billion yen. The segment includes the brands Sublimic, Primience and Crystallizing, all of which will be transferred to Henkel. The trademark of Shiseido Professional, which covers a wide range of products, will be maintained by Shiseido and licensed to Henkel. All of the 500-plus employees working with Shiseido Professional will be transferred to the new business.
During a press conference to discuss Shiseido’s financial results, the company’s representative director, president and chief executive officer Masahiko Uotani said the aim of the sale was to continue consolidating and strengthening Shiseido’s position as a skin beauty company.
“The salon business is in a different category from our core business, and requires different know-how than the skin care business,” Uotani said. “There are certain things that we can’t always deal with completely, and so it is better for us to put skin care brands at the center of what we do and to partner with other companies that we can trust in other categories.”
“This transaction is a step-change for Henkel’s Hair Professional business,” Henkel chief executive officer Carsten Knobel said in a statement Wednesday. “By expanding our Professional business in Asia Pacific, we will become one of the leading players in this highly dynamic region with attractive growth potential. This move will also further strengthen our Hair Professional business, which has already shown a very strong development in the past years and will be an integral part of our future Consumer Brands business unit.”
“We will significantly increase our market position in Japan and China, the world’s top two and three Hair Professional markets and important centers of trends and innovations,” said Wolfgang König, executive vice president, Beauty Care at Henkel.
Henkel has made numerous hair care-related acquisitions over the past few years. In 2017, the group purchased Nattura Laboratorios and the North American Hair Professional business from Shiseido. In 2014, Henekl acquired three companies — Sexy Hair, Alterna and Kenra — in the U.S.
Henkel’s Professional Hair Care business ranks among the top three activities worldwide. Its salon-specific brands include Schwartzkopf Professional, Bonarcure, Igora Royal and Authentic Beauty Concept. It makes sales of more than 1 billion euros annually and will become part of the Henkel Consumer Brands business unit, the multicategory platform being established through the merger of the company’s Laundry & Home Care and Beauty Care units by the beginning of 2023 at the latest.
With contributions from Jennifer Weil
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