Shiseido expects its 2012-2013 fiscal year consolidated business results to fall into red, due to an extraordinary loss consecutive to the write down of its US$1.9 billion acquisition of U.S. cosmetics firm Bare Escentuals.
The Japanese cosmetics group said in a release to have registered an impairment loss of 28.6 billion yens (272 billion euros) on intangible assets associated with Bare Escentuals, Inc. for the fourth quarter of the fiscal year. Shiseido therefore expects the fiscal year (April 1, 2012 through March 31, 2013) to end on a 14.7 billion yen loss (140 million euros), compared to 10.5 billion yen profit expected so far. It is Shiseido’s first net loss in eight years
Shiseido said that Bare Escentuals has made substantial media investment but took longer than initially envisioned to grow its retail business. “The gap between its sales budget and sales performance has been widening during recent months,” explained Shiseido, adding that its subsidiary will shift from its previous media investment to investment in consumer-facing promotions with top priority on reinforcing sales at existing stores.
The announcement comes on the heels of the abrupt resignation of Shiseido’s president last month following a two-year stint during which earnings weakened and its market share declined in Asian markets amid tough price competition. Hisayuki Suekawa stepped down due to health reasons, the company said. He was succeeded by Shinzo Maeda.
