Japan’s Shiseido becomes latest luxury brand hit by China slump, shares plunge

TOKYO (Reuters) – Japanese cosmetics powerhouse Shiseido fell by its daily limit in Tokyo trading on Thursday following midyear earnings that were hit by restructuring costs and slumping demand in China.

Shiseido becomes the latest casualty among luxury brands, including Cartier-owner Richemont and Gucci’s Kering (EPA:), to be stung by slowing growth and consumer confidence in the world’s second-biggest economy.

The company said on Wednesday it fell to an operating loss of 2.7 billion yen ($18.44 million) in the six months through June, from profit of 13.6 billion the previous year.

The shares plunged by their daily limit of 700 yen, down 15.5% from the previous session close.

In addition to a slump in sales to China due to changes in purchasing behaviour, the recording of 20.4 billion yen in structural reform costs also affected results.

Domestic sales were a bright spot, however, benefiting from a tourism boom in Japan fuelled by the weak yen. Some tourists, particularly Chinese, appear to be holding off on buying designer goods at home and splurging in Japan where they are cheaper.

($1 = 146.4100 yen)