Tuesday, March 12, 2013
DJ: Shiseido President Steps Down As Firm Looks To Get Back On Growth Track
TOKYO--Shiseido Co. (4911), Japan's biggest cosmetics company, said Monday that its president will step down after just two years at the helm, with the chairman retaking control of the firm in a stopgap measure to head off an internal emergency.
Hisayuki Suekawa will vacate his post following a tenure in which he struggled to maintain the company's growth momentum or capitalize on the ambitious acquisition of U.S. cosmetics group Bare Escentuals Inc. The company said his departure was for health reasons.
Shiseido has been hit by a downturn in its performance, saying it expects its net profit to fall 27% in the fiscal year ending March 31 to Y10.5 billion ($109 million) as it faces a declining domestic market and a consumer backlash in China due to political tensions between the two countries.
While the firm didn't elaborate further on the reasons for Mr. Suekawa's resignation, the 53-year-old said at a news conference that he had been under strain due to Shiseido's poor business performance.
"I had a keen desire to resolve all those challenges. But particularly in the current fiscal year, we had to revise down our earnings forecast every quarter. The gap mentally weighed heavily," he said.
Returning to take the helm is Chairman Shinzo Maeda, who had been chief executive from June 2005 to April 2011, and was credited with helping to boost overseas growth.
The stock market cheered the news with the shares rising sharply after the early afternoon announcement to close with a 6.6% gain at Y1,362. The shares have lagged the overall market. Before Monday, the shares had risen 6.7% this year, compared with 18.8% for the main Nikkei Stock Average.
Mr. Maeda said his appointment was a short-term measure taken "to prevent an emergency" until the company can find a successor to help rebuild the faltering business and put it back on a growth path.
Mr. Suekawa said that a shortage of talent within the company prompted him to ask the experienced former CEO to return to his previous role.
The re-appointment of the 66-year old chairman as the top executive underscores the difficulties some big Japanese corporate groups have had in transferring power into the hands of younger executives.
Last year, Canon Inc. put chairman and CEO Fujio Mitarai back into the presidency saying that it couldn't find anyone suitable externally.
Suzuki Motor Co.'s chairman Osamu Suzuki, now 83, returned to be the president of the car maker in December 2008 after the then-president resigned for health reasons.
The pressure on many of Japan's once-dominant blue chips has been intensified by the need to move much more aggressively into foreign markets as Japan's population contracts, making it increasingly difficult to find growth opportunities at home.
Mr. Suekawa had been a key figure in the purchase of Bare Escentials, seen as a way to invigorate the Shiseido brand, which tends to appeal more to older consumers. The $1.7 billion acquisition in 2010 was the largest acquisition in Shiseido's history of more than 80 years. Industry analysts have said that the company has failed to spell out how the two will work together effectively, although they did launch the joint bareMinerals Skincare line in March 2012.
At the same time, the Chinese market, increasingly critical for many Japanese exporters as the largest overseas destination for exports, has suddenly turned sour for many Japanese companies after Tokyo decided to nationalize some contested islands last September, prompting loud protests from Beijing that continue to this day.
The territorial spat has damaged the reputation of Japanese consumer brands. Last week, Shiseido was cited by customs officials in China for importing sunscreen that allegedly contained potentially harmful cadmium. While the incident involved one shipment of 3.6 kilograms in December and was one of 247 such product seizures, the news received widespread attention on Chinese internet sites.
The management changes will take effect on April 1, when the new financial year begins.