L’Occitane announced its interim results for the six months ended September 30. Despite macroeconomic headwinds in key markets, the group maintained dynamic growth momentum in the first half of fiscal 2023. The results were broad-based – with growth coming from all key brands, all three geographic regions and all three key channels.
In the first half, reported net sales amounted to EUR 900.5 million, representing 29.3 percent growth at reported rates or 20.8 percent growth at constant rates, mainly contributed by the initial inclusion of recently acquired brands, Sol de Janeiro and Grown Alchemist, and the decent growth of the group’s key brands. On a like-for-like basis – i.e. excluding the newly consolidated brands Sol de Janeiro and Grown Alchemist; Russia operations due to the group’s divestiture; the deconsolidation of the U.S. subsidiary last year; and at constant rates – sales growth was 5.9 percent in the first half, an acceleration from 5.1 percent in the first quarter to 6.7 percent in the second quarter.
Thanks to the group’s effective omni-channel strategy, the strong return in foot traffic did not overly cannibalise online sales. With most global markets now fully reopened, retail sales grew 4.4 percent at constant rates during the period, despite trading with 121 fewer stores, as compared with the same period last year. Meanwhile, online sales also continued to grow, with its online sales mix remaining significant at 29.4 percent. The group’s online presence was further supported by the inclusion of digitally-centric or digitally-native brands, such as Elemis and Sol de Janeiro.
Within its core brand, L’Occitane en Provence, travel retail channels rebounded stronger and earlier than planned, while brick-and-mortar channels were dynamic and online channels normalised. The core brand’s wide geographic presence also shielded its performance from stalled growth momentum in China and relatively muted growth in Asia, allowing it to capitalise on the rebound in other markets, especially in Europe. At the same time, its ability to quickly re-direct and target resources helped uphold its healthy operating profit margin of 11.4 percent (excluding exceptional items).
Elemis also performed well, supported by strong growth in the U.S. and further international rollouts. The cruise line business continued to rebound, while online and offline channels remained dynamic. China remained one of the most promising growth markets, despite the current pandemic situation. With the exclusivity period with its retail partner having ended, Elemis launched direct e-commerce, supported by a campaign in late July and early August on its Tmall flagship store. Already within this peak period, the beauty brand’s hero Pro-Collagen Marine Cream ranked second within Tmall’s face cream category.
Sol de Janeiro continued to break sales records during the first hald, with well-received summer ranges and the Beija Flor range driving solid growth in all channels, especially chain wholesale, distribution and marketplace. This fuelled the brand’s popularity further, driving its ranking to the number one spot in the U.S. and Canada in Sephora.
André Hoffmann, Vice-Chairman and Chief Executive Officer of L’Occitane, said, “Despite the challenging environment, the proven resilience of our business ensured that we continued to maintain strong growth momentum and achieve another record interim profit. Meanwhile, the next phase of our ongoing transformation into a multi-brand and geographically-balanced organisation was marked by the unveiling of our new corporate mission: with empowerment, we positively impact people and regenerate nature.
“Although current macroeconomic headwinds are likely to continue and lead to cost ramifications in all parts of our business, we are highly focused on executing a strong holiday season. In line with our corporate mission, we have a clear and collective focus on the triple bottom-line – our people, the planet and profitability – and remain committed to harnessing the inherent strengths of our brands to deliver sustainable growth and profitability,” added Hoffmann.