Shiseido Company, Limited

For the first nine months of fiscal 2025, net sales were JPY 693.8 billion, down 3% like-for-like. Core operating profit was JPY 30.1 billion, up JPY 2.7 billion year over year. Nonrecurring items totaled JPY 63.4 billion, and the company reported a net loss of JPY 44 billion; free cash flow was JPY 31.6 billion. By region, China and Travel Retail sales grew 8% in Q3, EMEA rose 22%, Japan e-commerce sales rose by the mid-20% range, and core operating profit in China/Travel Retail reached JPY 46.7 billion with a 19.3% margin for the first nine months. Full-year guidance was revised down for operating profit, profit before taxes and net profit after an Americas impairment, while underlying sales growth was revised to minus 1%. Management kept the core operating profit target at JPY 36.5 billion, raised expected free cash flow to JPY 35 billion, and maintained the annual dividend at JPY 40 per share.

Management framed the quarter as evidence that the company has “emerged from the tunnel” after a prolonged reset tied to China, Travel Retail, and Drunk Elephant. The CEO said the restructuring phase has built a foundation for a new growth trajectory, with major global transformation actions essentially complete and a voluntary retirement program at headquarters to finish the plan. Tone-wise, he was cautious on the immediate earnings impact but confident about the strategic reset, especially in the Americas, where he pointed to a rebuilt brand portfolio and a planned repositioning of Drunk Elephant.

The CFO highlighted that cumulative cost reductions for Q3 reached JPY 21 billion, with full-year reductions expected to exceed JPY 25 billion and the 2026 benefit target of JPY 25 billion on track. She cited the 9M core operating profit of JPY 30.1 billion, the JPY 63.4 billion of nonrecurring items, and the raised free cash flow outlook of JPY 35 billion as evidence that financial discipline is improving the P&L and cash generation. She also explained that capex should trend down from 5% to 6% of sales historically to around 4% next year and about 3% by 2030, while dividends are planned at JPY 130 billion over five years and buybacks/M&A remain options later in the plan.

Analysts focused on how Shiseido can hit the new 2% to 5% sales CAGR and the 10%+ margin ambition, and management said growth should come from brand-led expansion rather than relying on market growth. On costs, management said the 3 percentage-point margin improvement comes from broader cross-functional optimization and that no temporary or extraordinary costs are being disclosed yet beyond what is already planned. Questions also pressed on regional growth and e-commerce; management said growth should be faster in EMEA and the Americas, that e-commerce detail is not disclosed, and that the company is moving toward internalizing e-commerce data and operations to improve execution.