L'Occitane International’s profits slump as Japan sales fall sharply
In the 2017-18 financial year, closed on March 31, cosmetics and body care group L'Occitane International recorded a revenue of €1.31 billion, equivalent to a 0.3% downturn. At constant exchange rates, the result was equivalent to a 4.6% rise. The operating income for the group, which owns the L’Occitane en Provence and Melvita brands, was €140.9 million, down 16.2% compared to the previous financial year. Net profits decreased by 27.1%, down to €96.5 million.
The group stated it has been affected by adverse exchange rates and by fiscal reform in the USA, and it also suffered a heavy sales decline in its leading market, Japan. In the period in question, sales in Japan were worth €218.9 million, some €19.8 million less than a year earlier. This means the country now generates a 16.6% share of L’Occitane International’s total revenue, as opposed to 18% the previous financial year.
China was instead a positive surprise, and generated sales worth €159.1 million, up from €139 million a year earlier. Sales in France reached €102.2 million, up 1.7%, and contributed 2.8% of the group’s growth.
Also positive was the performance of the group’s new brands, L’Occitane in Brazil, Melvita and Erborian. All three of them posted significant, double-digit growth in Japan, France and Brazil, where consumers are searching for more innovative products at affordable prices. L’Occitane en Provence remains nevertheless the driving force of the group, with the largest share of sales.
Another growth factor for L’Occitane International was the acquisition of a majority stake in LimeLife last January. The group launched the US make-up brand in Canada in March, and is introducing it in the UK in June. L’Occitane stated that it is still exploring other possible acquisitions, consistent with its current multi-brand strategy.
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