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Japanese skin care brand SK-II’s sales in Greater China rose in the second quarter, but the region in general remains challenging for parent company Procter & Gamble.
SK-II, which had been impacted by Chinese consumers’ boycott of Japanese beauty products amid a controversial discharge of treated wastewater from the disabled Fukushima Daiichi Nuclear Power Station, saw sales rise 5 percent in Greater China, with strong growth during the 11/11 holiday and modest growth in travel retail.
During a call with analysts to discuss the CPG giant’s second-quarter earnings, P&G’s chief financial officer Andre Schulten said: “It’s actually good to see the brand strengthening with the China consumer. Number one, the whole dynamic of Japanese brand sentiment is easing. We, most importantly, have made significant investments in brand building. As soon as we were able to get back into broad media coverage, we’ve done so with very strong amplification of the benefit and the efficacy of the product, which has worked well.”
The company also bolstered its department store presence, as well as boosting R&D with the launch of LXP Craftsmanship series, which it describes as “its most crafted, exclusive and luxurious skin care series to date,” according to Schulten.
Jon Moeller, chairman of the board, president and chief executive officer, added: “The growth of SK-II itself, and actually consumption growth on that business is a little bit ahead of even our shipment growth, is an indication of confidence. That’s, as you know, a very premium price product.”
Nevertheless, he cautioned that “the broad swath of society is not confident and is still struggling. That’s why Andre says we’re not out of the woods. I agree with that statement and that it will take some time still to get to dependable growth in China.”
P&G’s organic sales fell 3 percent in the second quarter, but were an improvement on a 15 percent decline in the previous quarter.
Other companies including the Estée Lauder Cos. have also reported struggles in China as the consumer cuts back.
Overall, P&G reported second quarter fiscal year 2025 net sales of $21.9 billion, an increase of two percent versus the prior year. Analysts had estimated $21.54 billion.
Beauty net sales were flat, while grooming grew 1 percent and health care was up 2 percent. Elsewhere, fabric and home care increased 2 percent, while baby, feminine and family care rose 3 percent.
Within beauty, hair care organic sales increased low-single digits driven by volume growth in North America, Europe and Latin America, partially offset by volume declines primarily in Greater China.
Personal care organic sales rose double digits, while skin care organic sales declined midsingle digits due to volume declines, partially offset by SK-II’s gains in Greater China.
Net income was $4.63 billion, or $1.88 per share, up from $3.47 billion, or $1.40 per share, a year earlier. Wall Street had forecast $1.86.
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