Oriflame reports strong sales increase on expanded sales force

By Simon Pitman

- Last updated on GMT

Related tags Cent Euro

Direct cosmetics sales player Oriflame has reported a strong increase in sales that falls in line with a significant increase in its workforce.

The company’s preliminary quarterly results, ending 31 March, showed that sales increased by 10 per cent to €396.8m, while local currency sales increased by 7 per cent, a figure that reflected a strong Euro currency.

IN line with the sales increase, the size of the company’s direct sales workforce increased by 9 percent to 3.8m, a factor that increased costs but and had a slight impact on the profit margin.

As a result EBITDA increased by 8 per cent to €53.3m, while the adjusted net profit figure fell 15 per cent, from €37.2m to €31.5m.

As well as higher costs, the company said the net profit figure was negatively impacted by foreign currency translation to the tune of €3.5m, which compared to a positive currency translation of €7.7m in the corresponding quarter last year.

The positive sales performance was driven by a 7 per cent increase in unit sales, together with strong volume increases in colour cosmetics and personal & hair care.

The highest growth rate was seen in the wellness category, while gains in the colour cosmetics category were driven by two new special edition mascara launches and in personal & hair care success continued with the development of the bath & shower brand, together with Feminelle deodorant.

The company also highlighted the fact that digital media is continuing to have a major impact on its sales, with over 70 per cent of its orders now being received online

A new initiative in this area is the development of a follow-up tool, which is providing sales representatives with the opportunity to pursue further leads on each order or enquiry received.

On a regional basis, the biggest gains were seen in the CIS & Baltic market, with local currency revenues up by 9 per cent to €230.6m. In the EMEA local currency gains were also up 9 per cent to €106.8m, while in Latin America and Asia sales were up in local currencies to 9 per cent to €19.7m and 27 per cent to €35.5m, respectively.

The company states that the outlook for 2011 remains unchanged. It expects operating margins to improve compared to last year and expects sales growth in 2011 to be 5-10 per cent in local currency.

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