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L’Occitane profit soars after restructure

Hong Kong-listed beauty-products retailer L’Occitane is reaping the benefits of a restructure with profit up 21.8 per cent last financial year to €117.6 million.

And chairman Reinold Geiger says even better results are in the pipeline. “The group now operates as a multi-brand entity, where unique brand identities are celebrated and common values shared — respecting nature, creating authentic and genuine experiences, promoting entrepreneurship, and bringing a human approach to beauty,” he said in a statement.

“The group encourages its brands to stay agile and autonomous, yet synergies are also being identified and capitalised. With the material improvements delivered by the core L’Occitane en Provence brand, combined with the largely accretive consolidation of Elemis, the group expects to see enhanced profitability in 2020 and beyond.”

Group net sales were €1.427 billion for the year to March 31, up 8.7 per cent at constant exchange rates. Gross margin remained high at 83.2 per cent and operating profit rose by 6.9 per cent.

L’Occitane’s Hong Kong net sales were €137 million, an increase of 9.9 per cent year on year, or 8.6 per cent at constant exchange rates. However, same-store sales fell 2.6 per cent.

“Macroeconomic uncertainties continued to erode consumption sentiment, reflected in a marked downturn in the Hong Kong retail market after the first quarter of {last year}, notably in the average ticket value,” the company said in its earnings review. “Meanwhile, the increase in mainland tourist traffic brought by new infrastructure did not uplift Hong Kong retail sales.”

Sales in China reached €178.1 million, an increase of 11.9 per cent, or 12.1 per cent on a constant-exchange-rate basis.

“Sales momentum in China was dynamic throughout the whole year,” the company said. “Sell-out sales remained strong even though trading with seven fewer stores than last year, posting a growth of 9.6 per cent at constant exchange rates, and with same-store sales growth at 6.9 per cent. The marketplace channel continued to drive growth, with impressive performances recorded during key festivals such as Singles’ Day, Chinese New Year and Women’s Day. Sell-in sales also posted encouraging results, with growth of more than 30 per cent, thanks to the launch of JD and dynamic B2B sales.”

In Japan, net sales rose 1.5 per cent to €222.1 million, however in local currency, the growth was just 0.1 per cent. “The flattish performance was due to a sluggish retail market. Nonetheless, retail sales of L’Occitane en Provence grew at a low single-digit rate as compared to last year, thanks to the new stores opened, the large-scale “Balloon Journey” marketing event and successful face care campaigns during the year.”

Taiwan net sales of €38.2 million, represented a decline of 3.2 per cent at reported rates, or 2.7 per cent at constant exchange rates.

“The [Taiwan] retail market remained competitive,” the company said. “The decrease in sell-out was largely explained by the negative 2.7 per cent same-store sales growth, together with the typhoon hits and poor weather during the summer season. Web sell-out channel, however, recorded double-digit growth, thanks to the revamped own e-commerce platform as well as the development of marketplace.”

Most other markets remained static for L’Occitane, with the exception of Brazil, where sales fell by 4 per cent, and the US, where they soared 35 per cent. 

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