Japanese cosmetics giant Shiseido said on Monday its full-year profit slumped 73 per cent, partly due to a drop in consumer spending in key overseas market China, a trend the company expects to continue into 2025.

Shiseido said its operating profit came in at 7.58 billion yen ($49.9 million) in the 12-month period ended December 31, compared with $184.7 million the prior year.

A retailer of high-end personal goods, Shiseido is seen as a barometer for consumer confidence in China, a market the company and its peers have come to rely on for sales growth.

“China’s cosmetics market suffered a prolonged downturn, weighed down by a decline in consumer spending and rising household savings amid worsening economic sentiment,” the Japanese company said in a statement.

Shiseido said its China sales were down 4.6 per cent year-on-year on a like-for-like basis, excluding the impact of foreign exchange and business transfers, and also forecast a sales decline in 2025.

“We think things will bottom out this year and that we will be able to achieve mature growth from then on,” Shiseido President Kentaro Fujiwara said of the China market at a post-earnings briefing with reporters.

On the positive side, the company experienced a 10 per cent increase in net sales in Japan and expects similar growth this year, supported by purchases from tourists.

Poor results in China also dragged down interim earnings reported last week by cosmetics competitors L’Oreal and Estee Lauder.

China’s once surging economy has been hobbled by a property crisis, mounting local government debt and rising youth unemployment. Compounding woes for global luxury goods makers has been a shift among Chinese consumers toward domestic brands.

Shares in Chinese beauty brand Mao Geping rose 85 per cent when they debuted on the Hong Kong stock market on December 10, and have climbed further since.

In November, Shiseido launched a two-year action plan to restore profitability and focus on its core brands.

Shiseido’s shares have sunk 42 per cent over the past 12 months, compared with a 5.1 per cent gain in the benchmark Nikkei average during the same period.

• Reporting by Rocky Swift; Editing by Tom Hogue, Jamie Freed and Sherry Jacob-Phillips, of Reuters.