L’Occitane sales rose 8.9 per cent in the 20166 financial year as the Hong Kong-listed skincare retailer demonstrated immunity to challenging retail conditions and exchange rate declines.
While Mainland China sales rose 16.8 per cent, the company’s Hong Kong and Macau sales dropped by 15.2 per cent. The Hong Kong travel retail business also suffered from the lower traffic in the Greater China region.
L’Occitane International’s net sales reached euro 1.2827 billion (US$1.457 billion) in the year to March 31, or by 5 per cent at constant exchange rates. The group says it managed to achieve “a decent sales growth under the global economic slowdowns and markets turmoil, through selective expansion of the retail and wholesale networks, emphasis on digital channels and platforms, successful new product offerings, enhanced CRM capability and integrated online/offline marketing campaigns for both L’Occitane and the emerging brands”.
L’Occitane chairman Reinold Geiger said during the year, exchange rates remained highly volatile and had negatively affected sales growth of the group in some key markets.
“Despite that, there was still a 3.9 per cent overall favourable foreign currency impact for 2016. Sell-out sales accounted for 75 per cent of net sales, rising 8.9 per cent (or 5.1 per cent at constant exchange rates) compared to 2015. This growth was mainly contributed by non-comparable stores including new stores opened and stores renovated in these two years.
The company says its own eCommerce initaitives along with a Tmall.com presence in China and selling through online channels in Korea contibruted to the growth. L’Occitane’s own eCommerce channel achieved a 14.5 per cent sales growth at constant exchange rates.
Japan posted a net sales growth of 4.5 per cent in local currency and contributed 14.2 per cent to overall growth.
“The decent growth outperformed the weak and flat market environment, which was mainly contributed by stores opened in these two years,” said Geiger.
Globally, the company maintained its selective retail expansion during FY2016 with a net 79 stores opened, compared to a net 82 stores opened during last year (excluding the acquisition of seven stores from a distributor in Norway). The group renovated or relocated 116 stores, reflecting its ongoing efforts to rationalise the retail network through opening in promising markets such as China, Japan and Canada while also closing underperforming stores.