Shiseido’s Operating Profit Surges 132% in First Half of 2026 as Restructuring Measures Take Effect

On August 5, leading Japanese beauty company Shiseido reported its consolidated financial results for the first half of 2026, covering January through June. Net sales increased 6.2% year over year to ¥499.0 billion, while core operating profit rose 90.1% to ¥44.4 billion. Operating profit climbed 131.8% to ¥41.9 billion.

On a like-for-like basis excluding the effects of currency translation, business transfers and related transition services, net sales declined 0.2%, remaining broadly flat from the previous year. However, like-for-like sales returned to growth in the second quarter, rising 2.1%, while restructuring measures centered on the Americas and stronger company-wide cost management contributed to a significant improvement in profitability.

Summary

Profitability Improves Sharply as First-Half Net Profit Nearly Triples

Shiseido’s first-half net sales increased from ¥469.8 billion in the previous year to ¥499.0 billion. While reported sales grew 6.2%, sales excluding foreign exchange effects declined 0.6%. On a like-for-like basis, which also excludes the effects of business transfers and related transition services, sales decreased 0.2% and remained broadly unchanged year over year.

Profitability improved considerably. Core operating profit increased by ¥21.1 billion to ¥44.4 billion, while the core operating margin rose from 5.0% to 8.9%. Operating profit expanded from ¥18.1 billion to ¥41.9 billion.

Profit attributable to owners of the parent surged 211.4% to ¥29.7 billion. EBITDA increased 44% to ¥70.0 billion, while free cash flow rose 29% to ¥22.5 billion.

The improvement was supported by restructuring measures centered on the Americas, as well as a lower cost-of-sales ratio and reductions in personnel, outsourcing and depreciation expenses. Despite increasing marketing investment by 8.1% to ¥146.2 billion, Shiseido reduced its selling, general and administrative expense ratio from 73.0% to 71.1%.

Sales Momentum Improves Across Multiple Regions in the Second Quarter

Second-quarter net sales increased 10.5% year over year to ¥267.0 billion. On a like-for-like basis, sales rose 2.1%, reversing a 3% decline in the first quarter. Core operating profit more than doubled from ¥15.1 billion to ¥31.4 billion, representing an increase of 107.7%.

In Japan, like-for-like sales shifted from a 4% decline in the first quarter to 3% growth in the second. China and Travel Retail moved from a 1% decline to 1% growth, while Asia Pacific recorded a 5% increase and Europe grew 9%.

The Americas, however, recorded a 7.6% like-for-like sales decline in the second quarter. Shiseido acknowledged the risk of sales falling short of expectations, particularly amid intensifying competition in Europe and the Americas and continued challenges at several brands.

Americas Business Returns to Core Operating Profit

First-half net sales in the Americas increased 6.0% on a reported basis to ¥54.6 billion. Like-for-like sales declined 0.9%, but the region generated a core operating profit of ¥2.0 billion, compared with a ¥5.8 billion loss in the previous year. Its core operating margin improved from negative 10.8% to positive 3.6%.

The improvement reflected a lower cost-of-sales ratio following the previous year’s inventory-related provisions, as well as restructuring benefits across personnel and other operating expenses.

Second-quarter e-commerce consumer purchases grew by a high-single-digit percentage, led by SHISEIDO. Drunk Elephant and Dr. Dennis Gross Skincare also generated positive online growth.

Shiseido expects its restructuring program to deliver ¥7.5 billion in benefits across the Americas in 2026 as it works toward full-year profitability in the region. The company plans to concentrate investment on its three leading brand-and-retailer combinations under its “Power Duos” strategy, while expanding its brand presence on Amazon.

China’s “618” Shopping Festival Supports Growth

First-half net sales in China and Travel Retail increased 10.0% on a reported basis to ¥191.4 billion. Like-for-like sales declined 0.1%, while core operating profit rose 22.7% to ¥47.6 billion.

Consumer purchases in China increased by a low-single-digit percentage during the second quarter. Shiseido’s strategy of concentrating investment on hero products delivered results during the country’s major “618” online shopping festival, with Clé de Peau Beauté and NARS generating growth. ANESSA also narrowed its sales decline.

Across China and Travel Retail, Shiseido continues to strengthen distribution controls and pricing discipline while reducing its reliance on excessive discounting. The company is shifting its portfolio toward high-performance, high-value products as it pursues what it describes as “quality growth” supported by stronger profitability.

ELIXIR and Fragrances Support Sales Momentum

Based on the exchange rates assumed at the beginning of the year, first-half sales at ELIXIR increased 7% year over year, including 10% growth in the second quarter. The renewal of its brightening lotion and emulsion products, along with a new shade of its tone-up UV emulsion, supported the brand’s performance.

In Asia Pacific, ELIXIR expanded its presence across open-sell channels, with first-half sales in the region increasing by more than 80%.

First-half sales at Clé de Peau Beauté increased 2%, while NARS grew 3%. By contrast, SHISEIDO declined 3%, ANESSA fell 10% and Drunk Elephant decreased 12%, highlighting differences in the pace of recovery across the company’s brand portfolio.

Shiseido’s fragrance business recovered from a 9% decline in the first quarter to 12% growth in the second, resulting in a 1% increase for the first half. New products from narciso rodriguez performed strongly, while ISSEY MIYAKE PARFUMS expanded its reach among new consumer segments.

During the second half, Shiseido plans to launch a major new Max Mara fragrance simultaneously across global markets as it seeks to accelerate growth in the category.

Full-Year Forecast Maintained as Second-Half Investment Accelerates

Shiseido maintained its consolidated forecast for the full year ending December 2026. The company expects net sales to increase 2.1% to ¥990.0 billion and core operating profit to rise 55.0% to ¥69.0 billion. Operating profit is forecast at ¥59.0 billion.

While recognizing the risk of weaker-than-expected sales in Europe and the Americas, as well as continued uncertainty across China and Travel Retail, Shiseido plans to strengthen investment in new products and marketing during the second half to support a sales recovery.

The company intends to maintain financial discipline while increasing investment in its brands and is targeting core operating profit above its current full-year plan.

Shiseido generated ¥16.0 billion in cost-reduction and restructuring benefits during the first half and expects the total to exceed ¥25.0 billion for the full year. As the company moves from restructuring toward renewed growth, its ability to deliver a broader sales recovery and address the different challenges facing individual brands will remain a central focus during the second half.

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