France-based but Hong Kong-listed L’Occitane Group saw its net sales grow by +19.0%* (at constant exchange rates) to €727.2 million in the first half of its FY2020 ended September, driven chiefly by the contribution from UK beauty house Elemis.
The fastest-growing geographic market by far was the UK with growth more than doubling to €76.8 million thanks to Elemis, which L’Occitane bought in January 2019. It marked the company’s largest acquisition since listing.
The UK has become the third-biggest country market for L’Occitane with a 10.6% share, overtaking France (now 6.7%). Excluding Elemis – which has a strong travel retail presence with Dufry-owned World Duty Free – growth in the UK was still strong at +10.8% in local currency.
Elemis also contributed to US growth of +26% to €133.6 million. Without the brand, the US market – the largest for L’Occitane Group – would have contracted by -5.1%, fuelled also by the closure of 12 L’Occitane en Provence stores and the cost of rebranding the Lime Life brand.
Apart from the powerful surges recorded by the UK and US markets, China, Brazil and Russia also posted double-digit growth in the first half. Among markets grouped in the ‘other geographic areas’ category South Korea, Malaysia, Germany and Italy had impressive growth rates of +19.4%, +25.4%, +12.6% and +16.8%, respectively.
Travel retail offsets falls in Hong Kong
In Hong Kong (which includes sales in Macau and to distributors and travel retail customers in Asia), sales declined by -5.6% to €58.3 million due to the continued social unrest which the company said “seriously affected traffic and consumption sentiment in FY2020 Q2”. However the retail sales decline was offset by higher travel retail sales elsewhere in the region, in particular Mainland China and South Korea.
Commenting on the Elemis brand, L’Occitane said: “Elemis was the biggest contributor to the group’s growth during FY2020 H1, with sales in the second quarter in particular exceeding expectations. It unlocked new higher-margin markets and sales channels [including maritime-Ed] while contributing to the group’s flourishing skincare image.”
Asian target for Elemis
L’Occitane plans to extend Elemis’s successful ‘digital-first’ strategy into several markets in Asia, having already opened a store on TMall Global, with plans to launch domestically in China in 2020, alongside a selective retail presence in the near future. The company did not divulge plans for Elemis in Asian travel retail.
L’Occitane en Provence, the group’s core brand – accounting for 76.3% of total sales – and widely distributed in travel retail, generated €554.9 million sales, up +5.7%. It was helped by launches such as the Herbae perfume and Infusion range, as well as continued success for Immortelle Reset serum.
Elemis is now the group’s second-largest brand with more than €84.2 million in sales and taking an 11.6% share. Elemis did not have a contribution to L’Occitane Group accounts in the first half of FY2019 but unaudited figures indicate year-on-year growth of around +25.0%.
The strong growth was due to the ‘digital-first’ plan which drove online sales with mid-double-digit growth in the UK, and high double-digits in the US. The launch of the first class amenity programme with British Airways and closer department store partnerships also positively affected growth for the brand in the period.
LimeLife, which accounts for 5.6% of total sales, was down by -5.6% while other brands – which include Melvita, Erborian and L’Occitane au Brésil – had a share of 6.5% and grew by +7.6%.
The key financial highlights are shown in the table below.
* All percentages at constant exchange rates unless stated.