×
40 830
Fashion Jobs
ESTÉE LAUDER COMPANIES
Latam E-Commerce Project Manager/Product Owner
Permanent · New York
MICHAEL KORS RETAIL INC
Sales Supervisor, Crabtree Valley, Raleigh nc
Permanent · Raleigh
GAP
General Manager - Lenox Square (Kids & Baby)
Permanent · Atlanta
GAP
General Manager - Northbrook Court
Permanent · Northbrook
GAP
General Manager- Stonebriar Mall
Permanent · Frisco
GAP
General Manager - Roseville Galleria
Permanent · Roseville
GAP
General Manager - Central Texas Marketplace
Permanent · Waco
GAP
Merchandise Planner - Boys - Outlet
Permanent · New York
GAP
Unassigned General Manager - Greater Nashville
Permanent · Nashville
ALICE AND OLIVIA
Sales Supervisor - Cabazon Outlet
Permanent · Cabazon
TARGET CORPORATION
Owned Brand Product Design Director, Pets
Permanent · MINNEAPOLIS
LA MER
Manager, Global Supply Chain Operations - Inventory
Permanent · New York
MAC
Business Development – Key Consumer Manager, Mac
Permanent · New York
H&M
Retail Flagship Visual Manager
Permanent · Chicago
JBCSTYLE
Art Director
Permanent · NEW YORK
JBCSTYLE
Sales Operations Coordinator
Permanent · NEW YORK
ESTÉE LAUDER COMPANIES
Manager, Solution Architect- Omni Retail
Permanent · New York
TOM FORD BEAUTY
Vice President, Marketing, Tom Ford Beauty North America
Permanent · New York
ESTÉE LAUDER COMPANIES
Category Insights Manager - Supply Chain
Permanent · New York
ESTÉE LAUDER COMPANIES
Senior Account Coordinator, Estee Lauder Travel Retail – Americas
Permanent · Los Angeles
ESTÉE LAUDER COMPANIES
Manager, Product Manager
Permanent · New York
ALICE AND OLIVIA
Sales Supervisor - Town Center at Boca Raton
Permanent · Boca Raton

Oriflame taking margin hit as forex weighs

By
Reuters
Published
today Jun 11, 2009
Reading time
access_time 3 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

MOSCOW, June 11 (Reuters) - Swedish direct seller of cosmetics Oriflame (ORIsdb.ST) is losing margin this year as the economic crisis caps its pricing flexibility, even in Russia, its most make-up-addicted market.


Oriflame

Johan Rosenberg, CIS and Baltics regional director for Oriflame, said in an interview local currency devaluation was the group's main concern as it imports "nearly everything".

"In terms of effect on our business and our profit, clearly currency has the most effect on our financial results, because we are reporting in euros and therefore we have of course lost quite a lot of margin this year," Rosenberg told Reuters.

Russia's cosmetics market took off in the early nineties as a consumer boom began and Russian women made up for decades of Soviet-era austerity and it had been growing 10-20 percent a year since. But the current economic downturn has slowed its pace as cash-strapped customers are cutting spending, and the devaluation of the rouble puts imported products out of reach.

"We see the currency, and we see the economic crisis in terms of how much money consumers will have in their pocket as the main concerns right now. But we also know that even in tougher times people like to use cosmetics."

That should allow Oriflame to achieve more in this region than the 10 percent sales growth forecast for the group as a whole, Rosenberg said.

INVESTING IN CUSTOMERS

In the first quarter of 2009, currency movements knocked 4 percentage points off operating margins as Oriflame's main currencies -- the Russian rouble, Ukrainian hryvnia and Kazakh tenge -- weakened considerably.

"The biggest investment is in pricing. We are investing in the customer who does not have much money ... We are not increasing prices in line with the devaluation," he said.

To mitigate the effects from exchange rates, Oriflame has raised prices by 5 percent so far this year.

Rival Avon Products Inc (AVP.N), the world's largest direct seller of cosmetics, in May posted a far weaker-than-expected drop in first-quarter profit and said pressure on its margins would be even greater in the second quarter. [nN05455709]

PRODUCTION COSTS

Oriflame is also seeking to boost the share of locally produced products in its sales.

"It depends on how quickly and when we will get production facilities, but the target is as much as possible, clearly."

Rosenberg said Oriflame, which only has one plant in the region -- a Russian lipstick factory -- was looking to build or buy a factory in Russia and had "several targets".

The region gives Oriflame around $1 billion in revenue every year, or nearly 60 percent of its total sales. The firm had 7.7 percent of the 12 billion euro market at the end of 2008, according to Euromonitor data provided by Oriflame.

French cosmetics group L'Oreal (OREP.PA) said last week it planned to build a plant in Russia, [nL4164945] while Avon launched a Russian plant in 2004.

(Editing by Will Waterman)

((maria.kiselyova@reuters.com, +7 495 775 12 42, Reuters Messaging: maria.kiselyova.reuters.com@reuters.net)) Keywords: ORIFLAME/

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nLT568002

© Thomson Reuters 2019 All rights reserved.