Strong recruitment drives boost Oriflame Q1 sales

By Louise Prance

- Last updated on GMT

Sweden based direct sales company, Oriflame has posted strong Q1
sales growth, achieved by a concerted recruitment drive in all
areas, and promotions associated with the company's 40th
anniversary.

The company said that global sales grew by 15 per cent to €268.5m, driven by an increase in the sales force of 18 per cent to 2,092,700 from 1,774.6 consultants. However, costs incurred from the recruitment process and the promotional activities resulted in net profit reaching a plateau, amounting to €31m, the same figure for the corresponding period in 2006. Investing in the lucrative skin care segment, the company strengthened its sales figures with the launch of the tri-peptide anti-aging Ecollagen range, and the relaunch of the Royal Velvet anti-aging cream, with both products appearing in the top ten best sellers list during the Q1 period. Price repositioning, improved formulations and revised packaging concepts contributed to strong sales in the toiletries division. Likewise successful fragrance launches aimed at male consumers and young girls helped strong performance in this sector. Geographically, excellent progress was seen in the Asian region with Euro sales increasing by 65 per cent to €15.2m, accounted for by strong sales in India and Vietnam - where sales doubled in comparison with last year. Despite China being a prime area for development for many direct selling companies, the company stated that the area had 'no material impact on the sales of the region'. The CIS & Baltics regions posted a 16 per cent increase in Euro sales, to €152.8 thanks in part to strong performances in Kazakhstan, Belarus and Mongolia. Sales in Russia, an area pitted for strong cosmetics growth in the future, increased by 12 per cent in local currency, with plans such as loyalty programmes and events surrounding Oriflames's 40th​ anniversary in March enhancing sales. Euro sales in Central Europe and the Mediterranean showed a 7 per cent increase to €59.4m as a result of a repositioning of toiletries in Poland, increased ad spend in Czech Republic and again, strong offers in Poland relating to the 40th​ anniversary promotion. Holland and Finland reported lower than average sales during the period, however, other counties in Western Europe and Africa aided an 11 per cent increase to €24.2m. Likewise all companies in Latin America, in particular Mexico, helped a 13 per cent increase to €10.3m. In line with sales growth in all regions, the company has changed its outlook for 2007 increasing the expected sales growth from 5-10 per cent to well over 10 per cent in local currencies. The company's long term financial targets have also been revised, with it aiming to achieve an operating margin of 15 per cent by 2009.

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