L’Occitane reports solid sales growth in first half; travel retail shines in Asia

Leading cosmetics and skincare company L’Occitane International posted a net sales increase of +8.6% (+12.4% at constant exchange rates) to €595.4 million for the first half of the 2019 fiscal year (to 30 September). Travel retail played a part in driving sales, notably in Asia (see below).

Operating profit fell by -57.8% to €5.8 million while net profit fell -47.9% to €5.6 million. L’Occitane attributed these figures mainly to significant first-half investments in advertising and marketing and unfavourable exchange rates, but predicted a stronger second half. L’Occitane noted that its business remained seasonal, adding that “financial performance in the first half of FY2019 should not be representative of its annual results for FY2019”.

Gross profit margin remained high at 82.4% though it dipped by -0.4%.

L’Occitane: Solid sales growth but profits dip on investments and exchange rates (All images via L’Occitane).

The US, Hong Kong and China were the fastest growing markets, with sales growth of +65.8%, +18.6% and +14.1% respectively (at constant exchange rates).

The company said US growth was driven by its share in beauty company LimeLife and by the “continued momentum” of its L’Occitane en Provence brand in the region.

L’Occitane’s performance in the half in detail (click to enlarge).

In Hong Kong, growth was attributed to the Immortelle Reset serum launch and to the region’s “dynamic travel retail market”. Immortelle Reset was also cited as a primary factor in growth in China.

L’Occitane International noted that marketing initiatives in Asia Pacific travel retail had helped to drive growth in the region and were expected to deliver further success in the second half.

Key Europe and Americas markets in detail (click to enlarge).

During the first half, the group also introduced a new strategy named ‘Pulse’ to pursue growth and enhance profitability. The strategy, it said, is anchored by five pillars: empowering teams; executing fundamentals, especially in a retail context; adopting an omni-channel, mobile and digital approach; engaging customers and strengthening brand commitments. In line with this strategy, the group said it has taken steps to foster an entrepreneurial culture, such as through a new incentive plan connected to growth and profitability.

Chairman and Chief Executive Officer Reinold Geiger said: “The introduction of the ‘Pulse’ strategy is a significant step in clearly defining our objectives of building trust, pursuing sustainable growth and enhancing profitability. It will guide our plans and actions, and underpin our future performance.”

The L’Occitane business by regional market in Asia in H1 (click to enlarge).
L’Occitane International highlighted the key factors in its FY2019 first half performance. (Click to enlarge.)

Geiger added: “Looking to the second half, we trust our recent marketing and advertising efforts will continue to bear fruit. We have also placed greater emphasis on communicating our commitments toward sustainability, which we believe is an integral part of our brand. With our collective focus and drive, we are confident to deliver long-term value to shareholders.”

Food & Beverage The Magazine eZine