TOKYO — Masahiko Uotani, president and chief executive officer of Shiseido, on Thursday revealed succession plans that is expected to see him step down within the next two years.
As of Jan. 1, Uotani’s role will change to representative director, chairman and CEO, while Kentaro Fujiwara will assume the position of president and chief operating officer. Fujiwara is also expected to be selected as representative director at a board meeting in March.
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“Fujiwara and I will work closely together for two years managing the company jointly, and then we will see what happens after that. I don’t want to just pass the baton on suddenly,” Uotani said.
Fujiwara currently is CEO of Shiseido China and also a senior executive officer of the parent group. He joined Shiseido in 1991 and was transferred to Germany three years later, and was based in Paris, France, and Dusseldorf, Germany, for more than six years, according to Shiseido. He also has held leadership roles as president of Shiseido Korea and general manager of corporate strategy department before being assigned to Shiseido China.
His elevation to become Uotani’s apparent successor is perhaps an indication of where Shiseido sees its future: China.
Despite the slowdown in beauty sales in China caused by continued lockdowns, Shiseido’s business was up 19 percent on a like-for-like basis in 2021. Uotani has aggressively globalized the business during his tenure, with growth in China being a cornerstone of his strategy. Last August, the company launched an innovations fund with Boyu Capital to explore investment opportunities in China’s emerging cosmetics and wellness brands, plus related technology, such as ecommerce.
Shiseido first entered China in 1981, and has since expanded its business to include research and development, production and distribution. The country is home to Shiseido’s second headquarters.
The country — which is the second-biggest beauty market in the world behind the U.S. — is a significant growth engine for Shiseido. This year, though, sales have declined there as challenging conditions persist.
In addition to investing in emerging businesses there, Uotani’s long-term strategy to be the world’s number one skin beauty company by 2030 was developed to leverage the holistic approach to beauty and skin-care that dominates many Asian markets.
“This is an approach that is more skewed towards Eastern thought,” he told WWD Beauty Inc earlier this year. “How you eat and live your life impacts your skin condition. Japanese and Chinese women truly believe good digestion help their skin.
“Our frame of reference can be expanded with consumers changing,” he continued. “Therefore we made the decision to focus on skin beauty — not skin care. Holistic beauty is a more important concept and value for consumers.”
At the same time as revealing Uotami’s succession plan, Shiseido reported net profits declined 38.2 percent to 29.05 billion yen, or $198.4 million, for the nine months ended Sept. 30. The drop was mainly due to impairment losses associated with the transfer of the company’s personal care business, posted in the period under review, while the gains on the same transfer were posted in the same period a year prior.
Operating profit at Japan’s largest cosmetics company ell by 62.7 percent to 35.66 billion yen.
Shiseido saw nine-month net sales grow 4.7 percent to 762.74 billion yen.
In 2021, Shiseido launched a new strategy, under which it will implement global reforms with an emphasis on profitability and cash flow by focusing on what it calls “skin beauty.” Recognizing that this is where its strength lies, it is restructuring its business portfolio and improving profitability. The current year is what the company is calling its “back to growth” year, and it is focusing on promoting the growth of its global brands.
“While net sales on a like-for-like basis were lower than last year in the China business, which continues to be impacted by lockdowns, we achieved strong growth in the travel retail, Asia Pacific, EMEA and Americas businesses. Our key skin beauty brand Clé de Peau Beauté and core makeup brand Nars grew strongly and drove the growth. In the Japan business, the growth turned to positive thanks to the renewal of Elixir in September and other factors,” the company said in a release.
Sales in Japan rose by 1.3 percent to 178.56 billion yen, while sales in China declined by 10.7 percent to 171.9 billion yen. Shiseido saw its sales in the Asia Pacific region grow 10.2 percent to 48.74 billion yen, and in the Americas sales by 7.7 percent to 97.91 billion yen. Sales in the Europe, Middle East and Africa region gained 10 percent to 89.7 billion yen. The company’s travel retail business gained 15.2 percent to 120.14 billion yen.
The company left unchanged its guidance for the 12 months ending Dec. 31. It expects net profit to drop by 45.6 percent year-on-year to 25.5 billion yen.
Operating profit for the year is expected to decline by 6 percent on the year, coming in at 40 billion yen.
Shiseido is forecasting yearly net sales of 1.07 trillion yen, representing growth of 5.9 percent over the previous year.