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L’Occitane International announces financial results

L’Occitane International S.A., an international group that manufactures and retails beauty and well-being products that are rich in natural and organic ingredients, announced its interim results for the six months ended 30th September 2021.

SEE ALSO : L’OCCITANE acquires majority stake in beauty brand Sol de Janeiro

Despite the continued impact of COVID-19, the Group delivered a strong set of results in the first half of FY2022, with sales growth accelerating to 7 percent above pre-pandemic levels in the second quarter of FY2022. Importantly, the Group again expanded profitability, with its operating profit and net profit reaching a record.

In FY2022 H1, the Group’s reported net sales were EUR 696.4 million (US$789.2 million), representing an increase of 12.9 percent as compared to the same period in FY2021. Excluding the accounting effect of the deconsolidation of L’Occitane, Inc., the Group’s net sales were EUR 725.1 million (US$821.8 million), representing an increase of 18.6 percent at constant rates. The encouraging growth was mainly due to the loosening of COVID-19 restrictive measures and the normalisation of retail footfall in some markets. Retail, travel retail and wholesale channels all rebounded strongly.

The Group’s operating profit hit an all-time record, rising 143.8 percent to EUR 78.9 million (US$89.4 million). The operating margin increased by 6.1 points to 11.3 percent, supported by the leverage of the Group’s higher sales on fixed costs and distribution costs, one-off gains from the deconsolidation and reconsolidation of L’Occitane, Inc., and efficiency gains from previous store closures as well as restructuring measures. Excluding the gain from the deconsolidation and reconsolidation of L’Occitane, Inc., the operating profit margin was still strong at 10.3 percent.

The above factors cumulated in the Group delivering a record net profit of EUR 60.6 million (US$68.6 million), up 262.6 percent and representing 8.7 percent of net sales.

Despite the reopening of retail stores, consumers’ two years’ experience of living with the pandemic has led to some behavioural shifts becoming permanent. Online channels still grew a robust 11.6 percent in the second quarter of FY2022, on top of an outstanding 64.6 percent growth in the same quarter of the previous year – a testament to the ongoing success and effectiveness of the Group’s omni-channel strategy. Notably, even as the Group’s overall sales exceeded pre-pandemic levels, its online sales mix remained at a relatively high level of roughly a third of total sales.

The Group’s core brand, L’OCCITANE en Provence, was the largest growth contributor in FY2022 H1. Improved results were observed globally, with balanced profit contributions from Asia, North America and Europe. During the period, the Group invested significantly in China, the largest market for the core brand. As a result, L’OCCITANE en Provence outperformed the market in terms of online and offline growth and remained one of the top brands in the premium body care and hair care categories. In addition to its staple categories, L’OCCITANE en Provence created excitement through new launches in other product categories, such as its recent Osmanthus fragrance launch, which saw tremendous success in China, and accounted for 10 percent of the brand’s sales during the launch period.

Led by a digital-first global expansion strategy, ELEMIS accelerated its sales growth in the FY2022 H1. It continued to rapidly expand in Asia and other markets, opening flagship stores in China, Singapore, Malaysia, the UAE and Russia, as well as making initial inroads into pivotal Asian markets such as Japan, boosting its brand image ahead of the key holiday season. ELEMIS also showed strong performance in its heritage markets. After significantly reducing its cost base during the pandemic, ELEMIS maintained its lean and agile structure while sensibly stepping up its investments in marketing and in new geographies. Still, it continued to deliver a healthy operating profit margin of 17.3 percent, making it another key contributor to the Group’s expanding operating margins.

On 15th November 2021, the Group announced its acquisition of a majority stake in Sol de Janeiro, a premium body care brand. The acquisition is in line with the Group’s strategy of building a leading and geographically-balanced portfolio of premium beauty brands. It is a perfect strategic fit in terms of brand recognition and identity, product quality, management capability, as well as growth, profitability and cash generation prospects.

Mr. André Hoffmann, Chairman and Chief Executive Officer of L’Occitane, said, “We are very pleased with the strong results achieved against the still uncertain macroeconomic backdrop. This period of record profit coincided with the completion of major restructuring actions, and the evolution of the management team. This is a testament to the Group’s renewed sense of focus and discipline on a balanced approach to the top and bottom-line. Recently, we have accelerated our transformation into a multi-brand and geographically- balanced group that is supported by highly cash-generative businesses and growing earnings. We are now well-positioned for the longer-term to reach new markets and more age groups with innovative and exciting products and brands – all of which will continue to reflect our values and premium beauty image.”

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“That said, the recent return of COVID-19 restrictions in parts of the world proves that the pandemic is nowhere near over. This may cause some headwinds in the near-term. But given our proven agility and adaptability, and the inherent strengths of our brands, epitomised in the continued strength of our online channels, we look forward with optimism to deliver a strong holiday season and long-term value for our shareholders,” added Hoffmann.