Shiseido rose the most in nearly eight years after the company¡¯s fourth quarter earnings and full-year forecast beat analyst estimates.
The stock surged as much as 15% in Tokyo trading Thursday, the biggest intraday gain since May 2018.
The jump came after the cosmetics and beauty company said Tuesday that core operating profit for the fourth quarter rose 61.4% to ?14.4 billion ($94 million) from a year earlier. It expects core operating profit of ?69 billion for the year ending December, beating a Bloomberg consensus of ?63.7 billion.
The results were ¡°positive¡± for cost management and evaluation among investors is likely to improve, Jefferies Japan analyst Hisae Kawamoto wrote in a note to clients.
The full-year core operating profit benefited ¡°significantly from changes to bonus assumptions and cost reductions in China travel retail,¡± despite concerns about tensions between China and Japan, she added.
Once a formidable challenger to L¡¯Oreal and Estee Lauder Companies, Shiseido is navigating its toughest test in decades, hit by missteps in North America and losing market share to Asian rivals.
The company is cutting costs, prioritizing core brands, expanding its fragrances portfolio and moving into medical and dermal cosmetics to put itself back on track. CEO Kentaro Fujiwara last year unveiled a plan to grow sales by 2% to 5% annually through 2030, targeting a core operating profit margin of at least 10%.
Sales are expected to rise at a single-digit pace year-on-year across most operations in 2026, though China and the travel retail business remain constrained by challenges, Shiseido said. The company is targeting a core operating profit margin of 7% this year as it continues to pursue its longer-term profitability goals.
In North America, Shiseido aims to restore profitability by strengthening core brands and completing the turnaround of the Drunk Elephant brand this year. In Japan, performance is expected to improve through price adjustments and a stronger focus on high-traffic purchasing touchpoints, while in Europe and Asia Pacific the company plans to reinforce its brands to support stable growth.
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