Shares in the cosmetics maker dropped as much as 16 percent in morning trading in Tokyo on Thursday, the most since 1987 on an intraday basis, erasing most of its recent gains. The company reported a January-June operating loss of ¥2.7 billion ($18.4 million), compared with profit of ¥13.6 billion a year earlier.

Shiseido has been taking steps to build sustainable growth and improve profitability, including cost cuts and offering early retirement for 1,500 staff. China is the cosmetic’s company’s most crucial market outside Japan. The company took a ¥22 billion restructuring charge after weak demand from Chinese consumers continue to weigh on its travel retail and sales in the country, pushing down overall profit in the first half.

Shiseido Chief Financial Officer Ayako Hirofuji said Chinese consumers remain reluctant to buy Japanese products on lingering concern over the discharge of treated water from the wrecked Fukushima nuclear power plant. The water release sparked a boycott by Chinese consumer in late 2023, forcing Shiseido to cut its profit forecast.

Shima Yamanaka, an analyst at SMBC Nikko Securities Inc., wrote in a note that the operating profit loss left a “negative impression” and that Shiseido needs to revamp its growth strategy.

The company will develop a new management strategy at end of November, the CFO said at the news conference.

This article was written by Eddy Duan from Bloomberg and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

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