The chief executive of Japanese cosmetics giant Shiseido Co believes inbound tourism will return next year as the pandemic abates, beginning a gradual recovery in sales of high-end goods to travelers.
A halt in tourism amid the COVID-19 pandemic has cut off sales to Chinese visitors, a critical segment in years past. China may start to ease travel curbs after hosting the Winter Games in Beijing, and a reciprocal opening in Japan would start a “welcome back” of tourist shoppers, Chief Executive Masahiko Uotani said.
“Next summer will be a turning point,” he said in an interview.
Like other companies in the luxury sector, Shiseido has been hit hard by COVID-19 related lockdowns that shuttered department stores and airport shops. Operating profit plunged 87% to 15 billion yen ($131.7 million) in the year through December 2020. The company is expecting a partial recovery to 27 billion yen this year.
Shiseido is aiming to reach 15% operating margin by 2023 and become the global leader in skincare by 2030. To get there, the company is divesting of some lower-priced brands.
In February, it announced the sale of skincare and shampoo brands to private equity firm CVC Capital Partners for 160 billion yen. Shiseido said in August it would sell three make-up brands for $700 billion to U.S.-based investor Advent International.
“When we made the plan last year, no one thought that the corona situation in Japan would last this long,” Uotani said. “If economic activity in Japan reaches the level of Europe and the U.S., I think the cosmetics industry will recover all at once.”
“What I’m hoping for is the spring of next year,” he added.
On mainland China, there are signs of economic slowdown and concerns of tighter regulation, but the market remains an attractive overseas market.