Japanese cosmetics giant Shiseido announced on Monday (February 10) that its full-year profit for 2024 had dropped by 73%, partly due to a decline in consumer spending in the Chinese market. Shiseido predicts that this trend will continue into 2025.
According to reports from Reuters, Shiseido stated that its operating profit for the 12-month period ending on December 31, 2024, was 7.58 billion yen ($49.9 million), compared to 28.13 billion yen the previous year.
As a high-end personal care retailer, Shiseido is considered a barometer of consumer confidence in China, with the company and its peers relying on the Chinese market for sales growth.
The Japanese company mentioned in a statement that the deteriorating Chinese economic situation led to a decrease in consumer spending and increased savings by households, resulting in a prolonged slump in the cosmetics market in China.
Shiseido also mentioned that excluding the impact of foreign exchange and business transfers, its sales in China decreased by 4.6% year-on-year and it is forecasted that sales will continue to decline in 2025.
Shiseido CEO Kentaro Fujiwara, speaking at a press conference after the financial report, expressed optimism for the future, stating, “We believe that the situation will hit rock bottom this year, and afterwards, we can achieve steady growth.”
Despite facing headwinds in the Chinese market, the company saw a 10% growth in net sales in Japan and expects similar growth this year supported by tourist purchases.
The underperformance in the Chinese market also affected French cosmetics giant L’Oréal. The company’s financial report released on February 6 showed fourth-quarter sales in 2024 of 11.08 billion euros ($11.49 billion), slightly below the expected 11 billion euros, due to the continued softness in the Chinese beauty market and slowing demand in the United States.
L’Oréal CEO Nicolas Hieronimus, in the earnings statement released that day, mentioned that “the ecosystem in China remains challenging,” but he highlighted that after going through a period of macroeconomic pressure, the global beauty market is expected to experience a broader normalization.
The Chinese economy is facing challenges due to the real estate crisis, increasing local government debt, and a sluggish job market. Most Chinese people feel pessimistic about their job security and future prospects, weakening consumer confidence in China and impacting global luxury goods giants in the Chinese market.