HK-listed L’Occitane sees 9-month sales in South East Asia shoot up by 23.6%

The international manufacturer of beauty and well-being products saw net sales for the nine months ending December 2018 grow 10.6% at constant rate to €1.1bn ($1.2bn).

Strong Asia growth

Sales growth in China remained strong at 12.7%. The company credited the “dynamic” growth to the success of L’Occitane’s Immortelle Reset serum and its innovative marketing efforts.

Similarly, Hong Kong achieved double-digit growth despite growing at a slower pace in the first half of the 2019 financial year due to challenging macroeconomic and retail conditions.

“Although macroeconomic uncertainties are reducing consumer confidence in some markets, we managed to maintain solid growth,”​ said Reinold Geiger, chairman and CEO of L’Occitane.

LimeLife drives sales

The group noted that the contribution from LimeLife drove much of the sales progress in the US. However, its flagship L’Occitane en Provence brand experienced growth during the first nine-months of FY2019 despite having 14 fewer stores than the same period of last year.

L’Occitane acquired LimeLife last January as part of its plans to drive the company’s global growth and complement its existing beauty strategy. The company also sold niched brand Le Couvent des Minimes in last January to focus on its core brands.

Excluding LimeLife and Le Couvent des Minimes at constant rates), the Group's sales improved by 4.4%.

Additionally, the company reported that its sell-out sales for the first nine months of FY2019 sales increased 11.8% from the year before. It accounted for 74.9% of the group’s net sales, amounting to €813.8m.

This growth was primarily contributed by “other sales”, namely LimeLife and marketplaces.

As compared to last year, sales of the Group’s web sell-out channels, including own e-commerce and Marketplaces, grew by 11.1%, which is equivalent to 14.3% of total sell-out sales.

Sell-in sales accounted for 25.1% of the Group’s total sales increased 6.9% and amounted to €272.7m. The company reported that growth in travel retail, web partner and B2B channels of the L’Occitane en Provence brand were the driving forces of the growth.

“For the remainder of the fiscal year, we remain optimistic in achieving good sales momentum from targeted marketing investments for our incredibly successful Immortelle Reset serum and attractive product launches,”​ said Geiger.

Biggest investment yet

The company continued to strengthen its portfolio by announcing the acquisition of premium skin care brand ELEMIS this month for a maximum of $900m.

This acquisition is the largest since its listing and is part of the company’s strategy to build a strong portfolio of premium beauty brands. Once finalised, ELEMIS will become a wholly-owned subsidiary of L’Occitane.

The deal is expected to close in the first quarter of 2019.

“Our recently announced acquisition has enormous growth potential in regions such as the Asia Pacific. We look forward to tapping the new opportunities that will arise from this, as well as from our other current initiatives, to boost our presence in the global beauty market.”​