Shiseido Shares Slump as Weak China Demand Hits Earnings

Dow Jones08-08

By Tracy Qu

Shares of Japanese beauty brand Shiseido suffered their biggest drop in over 36 years after its earnings took a hit from weak demand in China.

The stock slid more than 15% to 3,810.00 yen ($25.97) in early trading in Tokyo on Thursday, hitting the limit down level. That marked the steepest intraday drop since October 1987, according to FactSet, and put year-to-date losses over 10%.

The tumble comes after Shiseido reported an operating loss of Y2.7 billion for the first six months of the year, compared with a profit of Y13.6 billion the same period last year. It also comes during a time of heightened market volatility

Shiseido's China sales fell 7% on the year during the half, as consumers reined in spending and built up savings, it said in the earnings report on Wednesday.

In its home market of Japan, sales jumped 13% during the six-month period.

Travel Retail, Shiseido's global duty-free business, posted a sales drop of 23% on year for the first half, which the company attributed due to weak sentiment and changes in Chinese consumers' buying preferences.

Shiseido said that it is working to build a "sustainable profit delivery business model" for the China market in a weak macroeconomic environment. The plan includes strengthening online platforms that have high growth potential, and cutting costs, it said.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

August 08, 2024 00:46 ET (04:46 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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