Shiseido’s 2024 operating profit tanked 73.1 percent year-on-year, as China’s economic growth continued to decelerate and the country’s duty-free retail market Hainan Island faced ongoing challenges.

The Japanese beauty giant reported Monday its operated profit reached 7.575 billion yen, or $49.9 million, on sales of 990.586 billion yen in the year ended Dec. 31, 2024. Sales were up 1.8 percent in reported terms and dipped 1.3 percent on an organic basis against 2023.

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

On a like-for-like basis, Shiseido’s business in China declined 4.6 percent to 249.95 billion yen. The country’s housing market is in a fragile state and consumer confidence remains low. At the same time, domestic beauty brands are beginning to give international labels stiffer competition.

“While we believe consumer spending in China, including its duty-free retail, is likely to remain subdued, the rest of the global beauty market is expected to grow at a moderate pace throughout the year,” the company said.

Shiseido continued accelerating growth in its domestic market, where the group said it registered “robust” growth for its marquee brands Shiseido, Clé de Peau Beauté and Elixir.

“While the number of foreign visitors to Japan continued to exceed its pre-pandemic levels to hit a new record high, inbound consumption grew at a more moderate pace than anticipated on the back of shifting trends in purchasing behavior of foreign visitors,” Shiseido said.

In Japan, the group’s sales reached 283.8 billion yen, up 9.2 percent reported and 9.5 percent like-for-like.

Weaker-than-expected business in China last year impacted other beauty behemoths’ business, including at L’Oréal and the Estée Lauder Cos.

In late November 2024, Shiseido announced the launch of “Action Plan 2025-2026,” due to the highly volatile external environment. This was on top of the group’s medium-term strategy, “SHIFT 2025 and Beyond,” which is underway. The new action plan’s goal is to “reinforce brand foundation,” “rebuild profitable foundation” and “enhance operational governance.”