China leads growth for L’Occitane International

China was among the fastest-growing markets for cosmetics and wellbeing products group L’Occitane International for the six months to September 30.

Along with Japan and Hong Kong, it was among the key contributing countries to overall growth.

China’s net sales rose 18.2 per cent year on year to €60 million (US$70 million), the group’s interim results show. At constant exchange rates, the growth was 22.7 per cent, driven mainly by same-store sales growth of 15.8 per cent. As well as the recovery of China’s retail market, the company says a marketing campaign featuring Chinese artist Lu Han continued to draw traffic both online and offline.

T-mall sales continued to grow at triple digits and were ahead of plan, and B2B also delivered an excellent performance thanks to growing orders from independent hotels and the Shangri-La chain, says L’Occitane.

In Hong Kong, net sales edged up 0.4 per cent to €51.1 million (2.6 per cent at constant exchange rates), growth being driven mainly by the travel retail channel. As well as duty free, this included airlines in China and Japan.

The retail market was still sluggish, and two underperforming stores were closed. There were also some temporary closures for renovations.

Hit by typhoons

Typhoons forced store closures in Japan, where net sales fell 4.8 per cent (1.8 per cent at constant exchange rates) to €99.4 million. Same-store sales growth was 1.4 per cent. However, e-commerce showed low double-digit growth. Melvita remained the growth engine in Japan with new stores. At the end of September, Japan had 30 Melvita outlets.

Same-store sales deteriorated by 7.9 per cent from the first quarter for Taiwan, where net sales for the six months dropped 3.6 per cent (71 per cent at constant exchange rates) to €15.3 million.

“Retail sales were hindered by the less-generous summer promotion offered by department stores, a couple of mediocre launches and the timing difference in anniversary sales in department stores,” says L’Occitane.

Nonetheless, sales of skincare products stayed strong, in particular the Immortelle and Reine Blanche ranges.

Overall, despite a challenging retail backdrop, group net sales were €548.2 million, down 0.6 per cent (up 1.1 per cent at constant exchange rates), with like-for-like sales growth 2.3 per cent.

Gross profit margin reached 82.8 per cent, 0.6 points higher, while operating margin fell by one point, mainly because of currency exchange headwinds. Profit for the period ended at €10.7 million.

During the year the company disposed of Le Couvent des Minimes, and excluding this and a one-off deal for L’Occitane au Brésil in September last year, the group’s sales grew by 2.3 per cent at constant rates and 0.5 per cent at reported rates.

Retail locations increased from 3037 at the end of March to 3104 as at September 30, while the group increased its own retail stores from 1514 to 1519.

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