Shiseido Company, Limited

For the first 9 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, driven mainly by cost management and structural reforms. Nonrecurring items totaled JPY 63.4 billion, mainly from goodwill impairment losses in the Americas and restructuring expenses, resulting in a Q3 net loss of JPY 44 billion. Free cash flow for the period was JPY 31.6 billion. The company said Q3 sales grew 4% and that China and Travel Retail grew 8%, while EMEA rose 22% year over year. For FY2025, Shiseido revised underlying sales growth to minus 1% and cut operating profit, profit before taxes, and net profit guidance because of the Americas impairment. It kept its core operating profit target at JPY 36.5 billion and raised free cash flow guidance to JPY 35 billion, which is JPY 20 billion above the initial expectation. The annual dividend stays at JPY 40 per share. Management also said it expects full-year cost reductions of over JPY 25 billion and noted a Q4 structural reform cost of about JPY 3 billion from the global HQ voluntary retirement program.

Management said the company is emerging from a prolonged reset and believes Q3 was the first clear sign that the sales base has stabilized. The CEO emphasized that structural reforms are largely complete, with the major Global Transformation Committee actions to be finished by end-2025 and benefits of JPY 25 billion expected in 2026. Tone-wise, the message was firm and forward-looking: Shiseido wants to move from defense to growth, centered on stronger brand power, tighter global operations, and a more disciplined, innovation-led culture.

The CFO focused on the improving financial structure and the midterm financial targets. She said the company targets core operating margin above 10%, ROIC above 10%, ROE above 12%, and free cash flow of more than JPY 100 billion by 2030, while keeping CapEx more disciplined, falling from 5%-6% of sales historically to around 4% next year and about 3% by 2030. She also described a cash allocation hierarchy of CapEx, debt repayment, and dividends, with JPY 130 billion planned for dividends over five years. On governance, she said regional CFOs will now report into headquarters CFO to improve risk visibility and financial discipline.

Analysts pushed on how Shiseido can deliver 2%-5% sales growth and a 3 percentage-point margin improvement, and management said the plan assumes it can grow even if market growth is only flat to modest, while cost optimization will come from a broader cross-functional review rather than just isolated cuts. Questions also focused on regional growth, especially China/Travel Retail and the Americas; management said China is stabilizing, online is driving recovery, and the Americas still have significant upside through Shiseido, NARS, Dr. Dennis Gross, and fragrance, especially under Alberto Noe. Analysts also asked about FY2026 profit visibility and nonrecurring items; management said the JPY 25 billion cost savings are already embedded, but inflation and tariffs remain risks, and this year's nonrecurring items were guided at JPY 78.5 billion, with about JPY 15 billion noncash.