Shiseido domestic sales drop 30% following tax increase

Shiseidos domestic sales dropped about 30% from the previous year in the first two weeks of April, after consumption tax increased from 5% to 8%. However, there has since been some recovery to within 10% to 20% of last years levels and by July sales should have recovered, according to the company. The early April sales drop followed a year on year surge of about 20% in March, as customers bulk bought expensive items such as face creams before the tax increase.

The decline underlines the need for Shiseido to move more quickly into faster growing markets, such as China and Indonesia, to lessen reliance on Japan, which generates just under half of its Japanese yen ¥762bn annual sales. For the time being, it continues to be important to bolster domestic results. The company hopes promoting high-end products can help do this.

Even so, according to Shiseido’s President, Masahiko Uotani, the “quite sluggish” domestic market will probably shrink by mid-single digits this fiscal year, while its own sales will probably drop about 1.9%. There seems little chance for Japan’s market to grow and so, for Shiseido, the onus is on expansion in its 88 overseas markets.