Shiseido Faces Tough Turnaround After Costly Cosmetics Stumbles

Shiseido Co., once a formidable challenger to L’Oréal SA, and Estée Lauder Companies Inc., 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.