PARIS — Shiseido Co. Ltd.’s stock tanked Thursday, one day after the Japanese beauty giant released first-half earnings that were weighed down by dampened demand in China and restructuring costs.
The company’s stock plunged by its daily limit of 700 yen, or $4.79, equivalent to 15.5 percent, to 3,810 yen at the Tokyo Stock Exchange’s close.
Year-to-date, Shiseido shares have lost 39.1 percent.
The company, which is Japan’s largest beauty player and eighth largest in the world, joins the ranks of other industry players to be hit by stalled business in China.
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On Wednesday, Shiseido reported an operating loss of 2.7 billion yen in the six months ended June 30, versus a profit of 13.63 billion yen in the same prior-year period.
The group said the China business was adversely impacted by the slowdown in spending on the back of faltering economic sentiment. Shiseido also logged 20.4 billion yen of structural reform costs.
Company net sales rose 2.9 percent to 508.54 billion yen in the first half.
“The domestic cosmetics market remained solid, underpinned by steady demand as well as a recovery in the number of foreign visitors to Japan, which exceeded its pre-pandemic levels, although price hikes continued to weigh on household spending,” Shiseido said in a statement Wednesday.
“In the overseas cosmetics market, the trends and pace of growth were mixed across regions,” the company continued.
Beauty companies are closely watching the Chinese market, which had been robust and full of promise.
As previously reported, L’Oréal’s sales in the first half were down 1.7 percent in North Asia, where mainland China accounted for two-thirds of the region’s business.
“After a very slight recovery at the start of the year, market growth turned negative in the second quarter, as the comparison based was very high,” L’Oréal chief executive officer Nicolas Hieronimus said during a conference call with financial analysts and journalists on July 31. “And we are not seeing any pickup in consumer confidence, which is critical to growth in beauty.”
Overall, L’Oréal estimates that beauty market was down 2 percent to 3 percent.
“Within that, there was a huge divergence in trends,” Hieronimus said. “Mass was up slightly, while luxury was down in high-single digits. In that context, we grew plus 0.8 percent and continued to outperform the market.”
The Estée Lauder Cos., which will release fourth-quarter fiscal earnings on Aug. 19, has been seeking to jump-start sales in mainland China, as well as in its home market of the U.S.