Cosmetics brands enjoy buying rush

May 15

Major cosmetics brands enjoyed large sales boosts in March as customers rushed to stock up on product before the price increase – this despite the fact that some in the industry had said to expect little impact given that ‘customers only buy when they need cosmetics’. The same executives are expecting a short sales lull, which they will offset with expanded promotional campaigns, and that the rebound will begin by July.

As with many branded categories, cosmetics enjoyed huge boosts to sales on the back of the March buying rush. Kose and Shiseido both revised annual sales forecasts upwards. Consequently, all the big brands are expected a corresponding dip in FY2014, with Shiseido forecasting a drop of ¥8 billion.

Shiseido reported sales of ¥726 billion, ¥12 billion higher than forecast, with operating profit soaring by 91% to ¥49.6 billion. Kose increased its forecast for FY2013 ending March by ¥10 billion to ¥190 billion. Fancl too said it expected sales to be up more than 10% overall compared to FY2012, and that sales in March alone were up 30% on the same month last year.

Higher priced products were again popular in the buying rush. Pola Orbis Holding’s BA brand saw sales in March double compared to 2013, particularly for lotions selling for ¥10,000-¥20,000 a go.

While none of these results are surprising, cosmetics companies had previously predicted much more conservative increases. Senior managers at several companies were reported as saying cosmetics were purchased either on impulse or for specific use at a particular time, and they expected no significant demand spike pre-April.

The industry is also confident that cosmetics sales will rebound quickly. Shiseido CEO Masahiko Uotani said he didn’t expect the immediate downturn in sales to last much more than about three months – and that drugstore sales would rebound particularly quickly. The company will run major sales campaigns in May through to the summer, particularly focusing on increased use of samples for key brands. It still hopes to see sales up 2% for the year, targeting ¥780 billion overall despite the inevitable drop in profits. Kose too will launch an expanded series of TV ads, and Fancl is distributing new discount coupons to encourage customers to keep buying.

Bourjois to exit Japan

French cosmetics brand Bourjois has announced it will pull out of the Japanese market at the end of July. Bourjois set up a Japanese office in 1999 and quickly expanded to around 1,000 doors, with particular success in variety store chains like Plaza (then Sony Plaza). According to WWD, sales have fallen in recent years due to declining demand for Bourjois product among the core market of women in their 20s.