L’Occitane profit beats original expectations

By Katie Nichol

- Last updated on GMT

Related tags Net sales Developed country

Growth in all its geographical markets excluding the US helped France-based natural cosmetics company L’Occitane deliver a profit above original estimates.

Reporting its first annual results since its listing on the Hong Kong stock exchange earlier this year, L’Occitane recorded a 13.9 per cent increase in net sales for the period ending 31 March 2010, with a figure of €612.2m ($770.5m).

Operating profit came in at €110.2m, representing an increase of 36.9 per cent on the prior year period. According to the company, the €81.6m profit attributable to equity holders was 10.6 per cent above the original profit estimate of €73.8m given when the company first launched its IPO.

“Despite a challenging business environment, we managed to deliver an encouraging set of results for the first time as a listed company. This demonstrates the company’s strong brand equity and sound planning and execution capability driven by a clear principle for pursuing profitable growth,” ​said L’Occitane chairman and CEO, Reinold Geiger.

Strong foothold in Asia-Pacific

L’Occitane recorded net sales growth across all its markets, with a particularly strong performance in the United Kingdom and Brazil, with growth of 25.1 per cent and 23 per cent respectively.

Double digit growth was also recorded in Japan and Hong Kong, with sales in these two countries and Taiwan accounting for 36.3 per cent of the company’s total annual sales. Sales growth in Other Countries, including China and Russia was 29.8 per cent.

The company’s three business segments, Sell-out (sales direct to end customers), Sell-in (sales to distributors) and B-to-B (sales to hotels and airlines who distribute freely), all experienced increases in revenue, with net sales of €449.8m, €141.7m and €20.7m respectively.

Accounting for 73.4 per cent of the total annual sales, the company’s Sell-out business recorded an increase in net sales of 16.4 per cent, which was attributed to the expansion of L’Occitane’s global network of stores.

During the financial year, the total number of retail locations increased from 1,271 to 1,541.

Future outlook

The company plans to continue increasing its number of retail stores in the future, in both emerging and developed markets, using its increased financial resources resulting from the IPO, it was said in a statement.

In addition to investment in marketing and R&D, the company previously said it planned to spend close to €50m over the next four years on extending and upgrading its French manufacturing facilities in Lagorce and Manosque.

Geiger was optimistic about future outlook, emphasising the ‘strategic advantage’ obtained through the company’s unique positioning.

“Today there is no other natural cosmetics company with a worldwide distribution like ours. No competitor commands the same presence as us throughout the developed countries as well as in all the emerging countries,” ​he said.

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