L’Occitane International says time for drastic changes in way companies are organised
“They were highly uncertain times, we were concerned about the company’s survival.” Adrien Geiger, general manager of L’Occitane en Provence and head of sustainable development at L’Occitane International, doesn't mince words.
The cosmetics group was hit hard by the adverse consequences of the Covid-19 pandemic which, at its peak, forced L'Occitane International to close 75% of its stores worldwide, comprising in total 1,569 doors in 60 countries.
The immediate effect was that, last October, the group listed on the Hong Kong stock exchange announced it was deploying a restructuring plan that involved cutting approximately 300 jobs out of the group's 9,000 worldwide.
At the start of this year, the group's American division was forced to file for Chapter 11 bankruptcy protection under US receivership law. The filing applied to the L’Occitane en Provence brand only, and allowed the division to continue trading while reorganising internally in order to slash its debt.
“Ever since it was set up, the group had never experienced anything like this, it was unprecedented,” underlined Adrien Geiger, son of Reinold Geiger, the businessman behind L'Occitane’s worldwide success.
Nevertheless, in the face of the Covid-19 crisis, L’Occitane International has proven resilient. In the first half of the 2020-21 financial year, sales for the beauty group - whose brand portfolio includes L’Occitane en Provence (accounting for 75% of total sales), Elemis, LimeLife, Erborian and Melvita - fell by 15.2%, but the slump was more modest for the year as a whole, with sales down 6.5% to €1.53 billion and, crucially, an operating income of €220.2 million, up by 17.6%.
China now the brand’s main market
As for many others, e-tail has been a major growth driver, the channel's share of sales increasing from 15% before the pandemic to nearly a third in the 2020-21 financial year, a 69.2% rise. As for China, L’Occitane’s sales in the country rose by 33.7% to €263.6 million, making it L’Occitane's leading market ahead of the USA. The two countries’ share of sales was 17% and 16% respectively in 2020-21, as opposed to 11.9% and 18% in the previous financial year.
Adrien Geiger, while not hiding his concern about a health situation that is still worrying, sees the post-pandemic world through the prism of responsibility. The latter is strongly linked to more collaborative, mutually supportive business practices. According to Geiger, small steps have been taken in this direction in the last 10 years, but now the business world needs to rise to the next level, which implies drastic changes in the way companies are organised. L’Occitane International has indeed began to consider various options, from localised sourcing to more sensible logistics.
And while some of these options are merely being mulled, L’Occitane International, notably via L'Occitane en Provence, is vigorously getting to grips with sustainability issues. “The issue of biodiversity must absolutely be discussed at the political level,” insisted Geiger, whose group is part of the OP2B (One Planet Business For Biodiversity) association of companies, through which L’Occitane International is promoting regenerative agriculture and the protection of natural ecosystems.
Change is evident on the consumer side too. Geiger said that emblematic in this respect is the Asia-Pacific region, where awareness of these issues is growing significantly, and where for example it is possible to recycle L’Occitane products in-store.
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