‘Challenging start’: La Prairie sales slump by 12% with China’s zero-COVID policies – Beiersdorf
The German multinational announced that La Prairie sales fell by 12% in the first quarter ending March 2023 during its earnings conference on April 26.
“With our La Prairie business, we faced a challenging start to the year due to the low traffic in China after the change in COVID policies by the end of 2022,” said Beiersdorf CEO Vincent Warnery.
The strict restrictions impacted significantly impacted La Prairie’s otherwise strong travel retail business, said the firm.
However, since the restrictions were lifted, La Prairie has seen an acceleration in brick-and-mortar and travel retail sales from February onwards.
“With the lifting of the zero-COVID policy and travel restrictions, we saw a significant acceleration in retail sales in Hong Kong that started already in January. Shortly after in February, the brick-and-mortar retail sales in China Mainland began to benefit from increased mobility. And finally, the traffic around Hainan picked up. In March, we already saw a rapid increase in demand,” said Warnery.
According to Beiersdorf sales data, La Prairie sales in China, excluding Hainan, increased 14% in February through March compared to the December-January period.
On the other hand, Hainan sales in March alone increased by 38% compared to sales in December through February.
From January to March, Hong Kong sales have been increasing by 38%, 113% and 160% month on month.
Moving forward, the firm is confident about the development of La Prairie in China.
“All this good news makes us confidence about the further development of international travel retail in the remainder of the year, supported by strong innovation, such as Skin Caviar Harmony. La Prairie will benefit from the normalisation of traffic in and out of China,” said Warnery.
He elaborated that the brand has made many advancements in China which would help to accelerate the business.
In the first quarter of 2023, La Prairie has unveiled 10 new locations of which five are in China. Furthermore, the brand has been expanding its presence online.
“We have an ecosystem which is much more positive. We used to rely only on brick and mortar a few years ago. Then we moved to Hainan, where we have 10 points of sales. Also, two years ago, we started to be to invest strongly in e-commerce – first with Tmall, then with JD.com and in the next months, with Tik Tok. All in all, we believe that we are in a perfect situation to see the turnaround of China.”
Warnery added: “We are today only in 35 cities in China. We're going to be in 42 cities by the end of the year. We've also eventually, by the end of 2023 want to be in 100 stores.”
Beiersdorf sales amounted to EUR2.5bn (USD2.76bn) in the first quarter, representing organic growth of 12.2%. Its consumer business segment generated sales of EUR2.1bn (USD2.32bn) and strong organic sales growth of 14.8%.