[Stock-Analysis] Shiseido (4911 TYO): Asia's Most Premium Cosmetics Brand

Japan has for long been known for its prowess in technology, production efficiency, and superior quality. So, it might come as a surprise to learn that the strongest Asian cosmetic brands, Shiseido also comes from Japan.

Shiseido has been one of the very few non-technology brands from Japan that has made it big in the global fashion, beauty and cosmetic scene. Leveraging its unique heritage and the positive effects of its country of origin, Shiseido has been able to penetrate markets around the world by offering high quality, relevant and exciting products. Shiseido has realized from quite early on, the importance of offering a highly differentiated experience to customers and also to excite them constantly through innovative and high-quality products.

However, since the beginning of the Covid-19 pandemic, Shiseido has seen its cosmetics sales plummet and its stock price has fallen like a rock.

Could now be a good time to pick-up Japan’s most prestigious cosmetics brand?

History of Shiseido

Shiseido was started in 1872 by Arinobu Fukuhara as Japan’s first western style pharmacy in Ginza, Japan’s fashion and cultural hub. “Shi Sei” means “where everything is born” and “Do” means “house of”.

Shiseido started out as a pharmaceuticals company when herbal medicine was the order of the day in Japan. But it outgrew its initial business when it formulated the winning concept of blending Japanese mystique and aesthetics with the technology and science of the western world. This combination became Shiseido’s signature right from its early days.

As early as 1888, it launched Japan’s first toothpaste. In 1918, Shiseido launched its first perfume, and by 1937, it came out with its first line of cosmetics. Since then, Shiseido has transformed itself into a full-fledged cosmetics company with a wide product line encompassing various aspects to cosmetics, from skin care to beauty products to general cosmetics. By the late 1970s, Shiseido started penetrating foreign markets in Europe and the United States.

Shiseido followed an uncommon strategy for Asian brands expanding beyond the region. Shiseido has used acquisitions as a main channel to gain foothold in the crucial cosmetics markets of Europe and United States. As cosmetics is an industry primarily driven by aspirations, lifestyle issues and images, Shiseido decided on the acquisition path to gain visibility, acceptance and access to established customer bases in new markets rather than spending years to establish the Shiseido brand from scratch.

In order to gain an entry into the French and thus the European market, Shiseido acquired the Carita brand and prestigious salon on the Faubourg St. Honore in Paris in 1981. The salon with it distinguished and rich clientele of royalty and celebrities commanded a unique position in the French market. To gain an entry unto the North American market, Shiseido acquired Unilever’s Helen Curtis in 1996. These acquisitions gave Shiseido an opportunity to build on something strong already in those markets.

Though the unique concept of blending eastern aesthetics with western science provided Shiseido with a strong differentiating factor, it had to extend this beyond a mere concept. Shiseido has always relied on its core philosophy for guidance.

Table of Content

0. Konichi-Value Score

1. Profitability

2. Opportunities & Risks

3. Financial soundness

4. Stock-price

5. Dividends & Share buybacks

6. Conclusion

0. Konichi-Value Score

🤩 = Amazing

🙂 = Good

😑 = Acceptable

😖= Bad