L'Occitane sales and profits rise, expects major benefits from Elemis buy
Hong Kong-listed beauty group L’Occitane said this week that its net profit in the year to March 31 soared almost 22%. It was above analysts’ predictions at €117.6 million (HK$1.03 billion), even though its revenue rise was more modest with an increase of just over 8% to almost €1.43 billion.
Revenue was helped by digital channels including its own e-commerce ops and marketplace sales.
CFO Thomas Levilion said the US, Russia and China were the fastest-growing markets, with currency-neutral rises of 31.8%, 12.2% and 12.1%, respectively.
But company like-for-like (LFL) sales rose only 1.8% with varied performances across different markets. China’s 12.1% total sales rise was complemented by a 6.9% rise on an LFL basis, although that was much less than the 15.1% rise of a year earlier. And other Asian markets struggled. Taiwan was down 2.7% and Japan 0.3%. Hong Kong fell 2.6% with vice-chairman Andre Hoffmann saying the company saw falling sales there in H2 as retail slowed down and tourist spending declined.
Sales in Europe were also sluggish with the key French market’s net sales rising 0.8% but being affected by yellow vest protests that drove LFL sales down. And in the UK, net sales rose just 1.4%, again with a small dip in LFL sales. However, successful QVC programmes, the launch of LimeLife and further development of Erborian boosted turnover there.
L’Occitane remains upbeat and in expansion mode with plans for up to 35 new stores globally this year. It’s also predicting a profitability boost in the year ahead on the back of the acquisition of the UK’s Elemis, for which it sees major potential in Asia Pacific.
The firm spent US$900 million to buy upscale Elemis back in January and is working to take it into new markets as well as widening its distribution channels. The purchase was the firm’s biggest deal since its stock exchange listing in 2010.
Hoffmann said there are clear synergies between the two brands and they can learn from each other. He’s particularly interested in applying the Elemis digital experience to the wider L’Occitane business as the former currently gets 30% of its sales online compared to L’Occitane’s current 15%.
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