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Japanese cosmetics giant Shiseido Co., Ltd. (TYO:4911) presented its third quarter 2025 results on November 10, revealing a return to sales growth in Q3 despite a significant goodwill impairment in its Americas business. The company's stock fell 9.08% following the announcement, closing at 2,423 JPY, as investors reacted to the impairment charge that resulted in a net loss for the quarter.
Introduction & Market Context
Shiseido reported that after two consecutive quarters of decline, the company returned to positive growth in Q3 2025, with sales increasing 4% year-over-year. However, this quarterly improvement wasn't enough to offset earlier weakness, as Q3 year-to-date net sales declined 4% to 693.8 billion yen. The company maintained its annual dividend at 40 yen per share despite cutting its net profit target for the full year.
The presentation highlighted a gradual recovery across key brands, with Core 3 brands showing consistent improvement throughout 2025 and Next 5 brands rebounding strongly in Q3. This recovery comes amid ongoing challenges in the travel retail market and previous issues with Drunk Elephant sales.
As shown in the following chart of quarterly sales growth by brand category, Shiseido's recovery trajectory is becoming more evident in Q3:
Quarterly Performance Highlights
Shiseido's Q3 2025 financial performance showed mixed results across regions. The company's Core Operating Profit increased 10% year-over-year to 30.1 billion yen for Q3 YTD, demonstrating that cost-cutting measures are beginning to yield results despite sales challenges.
The company's Q3 YTD executive summary reveals the significant impact of the Americas goodwill impairment:
Regional performance varied significantly:
- Japan: Modest growth continued at +0.3% YoY for Q3 YTD, with local core brands driving expansion
- China & Travel Retail: Returned to positive growth in Q3 (+8%) after declines in Q1 (-14%) and Q2 (-7%)
- Asia Pacific: Slight decline of 0.9% YoY for Q3 YTD, but gaining market share through innovation
- Americas: Continued struggles with 9.1% YoY decline for Q3 YTD, though structural reforms are progressing
- EMEA: Strong performance with 4.2% growth for Q3 YTD, accelerating to 22% in Q3 driven by fragrances
Detailed Financial Analysis
Shiseido's financial results were significantly impacted by a 46.8 billion yen goodwill impairment loss in its Americas business, which led to a net loss of 44 billion yen for Q3 YTD. Despite this impairment, the company maintained its Core Operating Profit target of 36.5 billion yen for the full year.
The company's 2025 outlook shows the revised forecast with the net profit target cut:
Cost reduction initiatives are showing positive results, with Core Operating Profit improving despite sales declines. The company has realized 21 billion yen in cost savings for Q3 YTD 2025, primarily through personnel expenses reduction (13 billion yen) and other SG&A optimization (4 billion yen).
The following slide details the steady fixed cost reduction that has supported profit improvement:
Shiseido's progress on global cost structure transformation is on track, with all key actions completed to secure 25 billion yen in cost savings for 2026:
Strategic Initiatives
Shiseido outlined several strategic initiatives aimed at returning the company to sustainable growth. The Action Plan 2025-2026 includes organizational restructuring at Global HQ, with an early retirement program expected to affect approximately 200 employees.
The company is also implementing a turnaround plan for Drunk Elephant, which has been underperforming. The strategy focuses on clarifying brand differentiation, reigniting brand love, regaining skincare leadership, and rebuilding retail partnerships.
In the Americas, Alberto Noe will officially assume the CEO position, transitioning from interim leadership. The region's strategy includes leveraging success from EMEA, strengthening partnerships with key retailers, and driving synergies to improve profitability.
Forward-Looking Statements
Shiseido presented its 2030 Medium-Term Strategy, focusing on maximizing brand value and achieving double-digit operating margins:
The strategy is built on three pillars: accelerating growth with brand power, evolving global operations, and driving sustainable value creation. The company aims to achieve Core Operating Profit margin above 10% by 2030, compared to 4.3% in Q3 YTD 2025.
The following slide illustrates the path to double-digit margins through cost optimization and growth acceleration:
Shiseido's detailed strategy includes a comprehensive approach to addressing market trends and leveraging the company's competitive advantages:
CEO Kentaro Fujiwara emphasized the company's commitment to innovation with the slogan "In every moment, in every life, beauty," while CFO Ayako Hirofuji stated, "We will lead the market with our innovation," highlighting Shiseido's focus on becoming a global beauty leader.
Despite the optimistic outlook presented in the slides, investors responded negatively to the significant EPS miss, with the stock dropping 9.08% following the announcement. The company's ability to execute its turnaround strategy, particularly in the Americas region, will be crucial for regaining investor confidence in the coming quarters.
Full presentation:
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