Shiseido's Tough Turnaround After Costly Cosmetics Misfires

Shiseido, once a formidable challenger to L’Oreal and Estee Lauder Companies, is navigating its biggest challenge in decades, hurt by a costly misfire in North America and loss of market share to agile Asian rivals. After spending $845 million six years ago to buy American brand Drunk Elephant to gain entry into a younger customer segment, the Japanese cosmetics maker has had to write off more than half of the investment on declining profits and sales. Shiseido’s stumble shows how quickly beauty brands can lose ground as social trends, faster product cycles and South Korean and Chinese rivals reshape the global cosmetics market. Amorepacific, Kolmar Korea and other South Korean companies have outflanked Shiseido, and now comprise the biggest exporters to the U.S.