JAPAN. Asian beauty group Shiseido saw its duty free and travel retail business outperform other key segments in the first half of 2018. Like-for-like net sales in the channel soared by +47% during the period (excluding the impact from business transfers in 2017). This was more than double the +17% growth of the company during the period.
In the first half, travel retail revenue reached JPY45.3 billion (US$414.5 million*) though the operating margin slipped slightly from 26.1% to 24.5%. Travel retail is now almost the same size as the EMEA region where sales were JPY46.9 billion (US$429.1 million) in H1 (see table below).
Within the channel, Shiseido, Clé de Peau Beauté and Anessa all posted high growth while sales of Nars doubled. Dolce&Gabbana “continued to perform well” noted the company.
President and CEO Masahiko Uotani said that Shiseido is now targeting cross-border net sales to exceed JPY100 billion (US$915 million) for the full 2018 financial year. This will be driven by marketing, inbound duty free sales in its home market of Japan, greater activity in China, and more focus on airport, downtown and inflight environments.
The geographic market that came closest to duty free in like-for-like growth terms was China where net sales grew by +32%. In other key markets, sales in Japan rose by +15%, Asia Pacific by +14%, and the Americas by +6%, while EMEA was flat at +0.2%.
The company’s eight key brands – Anessa, Clé de Peau Beauté, Dolce & Gabbana, Elixir, Ipsa, Laura Mercier, Nars and Shiseido – delivered an extra JPY66.2 billion (US$605.7 million) in sales. Leading the growth were Elixir (+48%), Anessa (+45%), Ipsa (+34%) and Nars (+32%).
In his outlook, Uotani noted that he expected to achieve his Vision 2020 plan two years earlier than initially outlined.
By then the company hoped to top JPY1,000 billion in sales and JPY100 billion in operating income. Shiseido now expects to achieve this by the end of 2018 with a comfortable operating margin of over +10%.
*Exchange rate: US$1=JPY109.3
