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L’Occitane thrives despite ‘turbulent environment’, Russian exit

(Source: L'Occitane / Facebook)

Groupe L’Occitane has survived the bankruptcy protection of its US division, a “turbulent macroeconomic environment” and the exit of its Russian business to post a record annual net profit.

The French cosmetics group, which is listed in Hong Kong and derives more than 40 per cent of its global sales in Asia, says its net sales were US$1.9 billion for the year to March 31, an increase of 15.8 per cent. Net profit of $256 million, was up 57.5 per cent year on year and the company’s operating profit margin increased by 3.3 points to a record 17.4 per cent. 

Chairman Reinold Geiger said the results demonstrate the resilience of the group’s brands and teams, along with its ability to withstand and overcome market turbulences. 

“The group’s commitment to building trust, sustainable growth and profitability continued to fortify L’Occitane en Provence’s position in the global premium beauty market.”

While L’Occitane’s namesake brand accounted for 76.8 per cent of total sales, the company’s new Elemis brand posted growth of 37.4 per cent, boosting its share of group sales by 2.3 points in just one year, to 12.5 per cent. 

“Elemis [is] a key contributor to the group’s improved operating profitability on the back of a highly successful digital-first global expansion strategy,” said Geiger in a stock-exchange filing.

By region, L’Occitane’s sales growth was driven by China (up 16.8 per cent), the US (13.5 per cent), the UK (21.4 per cent), and Hong Kong (24 per cent). Growth across all other regions was 16.1 per cent. 

As Covid-19 restrictions in Europe and the Americas were gradually lifted during the year, L’Occitane saw a strong rebound in footfall through retail channels, while online channels remained “dynamic”. 

“Travel retail, spas and cruise ship businesses also benefited from the comeback of local and international travellers. However, towards the end of FY2022, the macroeconomic conditions turned challenging, with a resurgence in Covid-19 outbreaks in many key markets and the geopolitical situation in Ukraine and Russia,” he said. 

The company ended the year with 3068 retail locations, down from 3088 year on year.  

The company said it did not anticipate any significant gain or loss from its withdrawal from Russia.

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