Shiseido’s China woes aren’t over yet.

Net sales at the Japanese beauty group increased 4 percent to $1.6 billion in its first quarter, as wariness towards the brand in the giant Chinese market continued to weigh on growth elsewhere, the company said Friday.

While many premium beauty companies are struggling in China due to a decline in travel retail and a pullback in discretionary spending, Shiseido, which owns premium brands such as Nars, Drunk Elephant and Clé de Peau, has a more unique issue. The release of treated radioactive water from the Fukushima nuclear plant in August 2024 led to a Chinese boycott of many Japanese-owned brands. In China, first quarter net sales declined 3 percent on a like-for-like basis to $356 million.

The company said its Clé de Peau Beauté and Nars brands, which are not marketed with the Shiseido name, performed well, while its eponymous line saw another quarter of negative sales growth.

Operating profit for the group fell 10 percent due to weak sales growth in travel retail and a decline in intersegmental sales. The company is in the midst of a strategic shift, aimed at reducing its reliance on promotions to fuel growth in favour of growing brand equity.

Outside of China, other markets fared better. In the U.S (a key growth market for the company), premium skincare lines Drunk Elephant and Dr Dennis Gross contributed to a 9 percent increase in sales. In Europe, the popularity of the group’s Narciso Rodriguez fragrance line boosted sales.

Travel retail declined 30.5 percent due to retailer inventory adjustments and low footfall in the popular shopping destinations of Hainan and South Korea, though the company said sales grew in Japanese duty free outlets, as tourists began to return.

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