The travel retail channel was a strong factor in alleviating an adverse Hong Kong market for L’Occitane International this financial year, and particularly in the final quarter of 2020.
The global beauty and well-being house – whose core brands are L’Occitane en Provence, Elemis and LimeLife – said that retail sales in Hong Kong continued to decline “as economic and social factors dampened consumer sentiment”.
However Hong Kong-listed L’Occitane International noted that what it described as “upbeat” travel retail sales in the region mitigated some of the weakness, resulting in a -1.3%* decline in Hong Kong in FY2020 Q3 (the three months ending December 2019).
The -1.3% result compares with a -3.6% decrease seen in the nine months to December. However same-store sales were down by -26.5% in the period, underlining just how severely the social unrest seen in the special administrative region last year has impacted visitor numbers and subsequently sales throughout the year.
The latest retail data from the Census and Statistics Department of the Hong Kong SAR show that in November 2019, provisional sales were estimated at HK$30 billion (US$3.86 billion) a decrease of -23.6% compared with the same month in 2018. For the first eleven months of 2019 taken together, retail sales decreased by -10.3% year-on-year.
Looking outside Hong Kong, L’Occitane’s only other negative market was Japan, which declined by -3.5% in Q3. Both markets were easily offset by other geographic regions, with the strongest growth coming from the UK (+98.4%, helped by contributions from recently-acquired Elemis), China (+32.4%, driven by online and offline campaigns and attractive festive season offerings), and US (+22.5%, primarily driven by Elemis).
Overall sales growth in Q3 reached +15.2% to €578.9 million, while nine-month growth was slightly better at +17.3% to €1,306 million. However measured by same store sales the nine-month period grew just +0.8%, mainly due to the weak Hong Kong market (-26.5%).
L’Occitane Chairman and CEO Reinold Geiger said of Q3: “We maintained our strong top-line growth momentum despite some mixed performances in certain regions and smaller brands, in line with our expectations. Through attractive product offerings and targeted campaigns, we are continuing to overcome various macroeconomic headwinds around the world. We expect to maintain this momentum through to the end of FY2020 (ending March 2020).
“It is pleasing to see LimeLife return to growth, which combined with our growth powerhouse, Elemis, will continue to drive our success going forward. Together with the ongoing momentum of L’Occitane en Provence, we are well placed to deliver enhanced profitability.”
* All percentages shown for L’Occitane sales exclude the effects of foreign currency unless stated.
