Shiseido core operating profit jumps 124% as restructuring drives recovery

Shiseido’s core operating profit rose by 124% in the first nine months of 2026 compared to the same period in 2025, prompting the Japanese cosmetics group to boost its full-year earnings forecasts. 

The figure is propped by restructuring, lower operating costs, and improved efficiency, despite modest underlying sales growth.

While the company’s core operating profit in Q1–Q3 2026 cashed in at ¥67.5 billion (US$275 million), up by ¥37.4 billion (US$233.9 million) from the same period in 2025, the numbers do not point to a sharp increase in consumer demand. Instead, the recuperation stems from internal reconfiguration.

Net sales increased 6.8%, however like-for-like growth was modest, sitting at 0.7%, reflecting the substantial contribution of foreign exchange movements to reported revenue.

The results mark a sharp recovery from the ¥44 billion (US$275 million) net loss recorded in the first nine months of 2025, with Shiseido posting a ¥44.4 billion (US$277.7) net profit in the corresponding period of 2026.

Following the financials, Shiseido raised its full-year core operating profit forecast from ¥69 billion (US$$431million) to ¥87 billion (US$$548 million). The number represents an increase of roughly 26% over its previous projection. Its full-year net profit expectations also increased from ¥42 billion (US$262.7 million) to ¥62 billion (US$389 million).

Shiseido’s operating profit surged 124% in the first nine months of 2026.

More-than-double operating profit growth

Shiseido credits the recuperation mainly to company-wide cost management and strategic restructuring. 

Between 2024 and 2026, the group cut down its cumulative costs by ¥72 billion (US$450 million). This is in addition to a roughly 20% reduction in total employees across its global operations in September 2026 compared to the end of 2023.

Gross profit margin went up by 2.2 percentage points from 76.8% to 79.0% compared to the first nine months of 2025. 

This was supported by lower product costs and some reversal of inventory provisions. The cost of goods sold decreased from ¥160.9 billion (US$1 billion) to ¥155.5 billion (US$973 million) even as sales increased. The figure represents a decline from taking up 23.2% of shares of Shiseido’s revenue to 21.0%.

The company also attributes the fiscal turnaround to improved operating efficiency as personnel expenses and other overheads declined relative to sales. Marketing spending increased 8.5% aligned with a strategy of targeted investments. The company increased emphasis on supporting major brands and product launches despite broader cost controls.

Shiseido also logs fewer outstanding expenses as the first nine months of 2026 did not face significant prior-year impairments and restructuring charges, assisting the company in returning to profitability.

These improvements demonstrate that Shiseido's restructuring is delivering financially, although certain benefits, such as inventory provision reversals, may not be recurring.

Shiseido’s restructuring efforts have strengthened profitability despite modest sales growth.

Regional profitability

Shiseido partially credits improved regional profitability for its turnaround. However, the core operating profit numbers emerging from the regions reflect the internal restructuring gains over steep increase in sales. 

This change was especially stark in the Americas, as the company flipped from a ¥7.6 billion core operating loss to a ¥5.6 billion (US$35 million) profit. However, Nars and Drunk Elephant continued to experience sales challenges in the region.

China and Travel Retail increased core operating profit by ¥13.2 billion (US$82 million), while Japan logged a ¥6.3 billion (US$39 million) uptick.

While core operating profit increased significantly across regions, their like-for-like growths were relatively less stark. The Americas recorded a 0.6% like-for-like growth, China and Travel Retail cashed in at 1.2% growth, and Japan saw a small decline of 0.4%.