17. Kosé
Japan
www.kose.co.jp

Beauty Sales:

$2 billion

Key Personnel:

Yasukiyo Kobayashi, chairman; Kazutoshi Kobayashi, president, Izuo Ikemi, managing director.

Major Products/Brands:

High-prestige, prestige and self-selection brands serving skin care, cosmetics and toiletries, and sold under a variety of brand names including Anna Sui, Sonia Rykiel Paris, Paul & Joe, Infinity, Prédia, Esprique Precious, Cosme Decorte AQ, Awake, Cosme Decorte, Beauté de Kose, Jill Stuart, Infinity, Grandaine, Crie, Visée, Phil Naturnt, Esprique, Sekkisei, Formule, Fasio, Nature & Co, Stephen Knoll, Happy Bath Day.

New Products:

Cosme Decorte Vice & Virtue fragrance, Nature & Co. Cotton Veil, Golden Bath Body Milk, De la Vie hair dye, Fasio makeup, Esprique Mellow Forming Rouge, Predia Body Care, Sea’s Dew White and Moisturizer White, Sekkisui sunscreens and facial masks.

Comments:

The Kosé Group was seeing signs of a recovery in consumer spending in the Japanese domestic market, and reaching the end of a three-year improvement plan, when the country was hit hard by the Great East Japan Earthquake of March 11, 2011.

For fiscal 2011, which ended March 31, 2011, the company reported that consumer prices had continued to fall, but that consumer spending had returned in some categories, partially due to government stimulus programs. As expected, the earthquake had a severe impact on the Japanese economy, resulting in a 0.9% decrease in net sales to $2 billion.

Overseas sales after conversion into yen accounted for 12.3% of total consolidated sales, up 1.5 percentage points, as sales were higher in China and other Asian countries.

High prestige and prestige items fared better than self-selection products sold in drug stores and convenience stores. In the cosmetics business, Kosé focused on increasing domestic sales of value-added products sold at stores that provide counseling to customers. For example, new lines were introduced for the Cosme Decorte and Infinity brands. Advertising and sales promotion spending was also increased.

Overseas sales were higher due to efforts to increase the number of specialty cosmetics stores selling Kosé products in China, introductions of new products in several countries, promotional activities and other actions.

Overall, sales in the cosmetics business increased 0.7% to $1.5 billion.

In the cosmetaries business, however, sales decreased 6% to $509 million.

Going forward, Kosé will continue to strengthen its management and focus on its core brands in Japan while aggressively investing overseas and in new businesses with prospects for high growth.
In 2010, Kosé expanded its overall business, by increasing its share of the cosmetics market in Japan and by targeting growing markets. The company succeeded in reducing the number of stores carrying its products to create a more selective network. It also reduced its large number of brands and products, focusing on those with highest potential, including its very upper tier selections, such as Cosme Decorte.

Sales of Sekkisei expanded as Kosé celebrated the brand’s 25th anniversary with a promotional campaign in Japan and overseas.

Kose entered the men’s skin care and cosmetics market in February 2010 when it signed a contract with Coty Inc. to import, manufacture, and sell Adidas products in Japan.

In May 2011. Kosé began Internet sales, choosing to showcase several of its high-prestige brands.

The company is working to expand its brands in Asia, starting with its premier brand Cosme Decorte in China and other Asian countries where the number of wealthy consumers is rising, and through the aggressive launch of the Jill Stuart brand which is popular among young women.

In April, Kosé issued a first-half forecast for the fiscal year ending March 31, 2012 (April 1, 2011—September 30, 2011) of $1 billion.

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