YSL Beauté's fourth quarter sales fell 3.5 per cent from €161.3 million to €155.6 million in 2003. Gross profit for the quarter, ending 31 January 2004, fell to €11.2 million, a 21.2 per cent drop in comparrison to the previous year.
YSL Beauté refrained from releasing a Christmas fragrance after failing to achieve sufficient returns on the launch of three product lines - Stella by Stella McCartney, Kingdom by Alexander McQueen and Essenza -earlier in 2003.
"The first year that new products are placed on the market is not always profitable," said president of YSL Beauté Chantal Roos."It is hoped that in coming quarters we will see a turnaround in profit margins," Roos told CosmeticsDesign.com.
YSL Beauté manufactures and distributes Yves Saint Laurent brand perfumes and cosmetics and Roger & Gallet brand toiletries as well as perfumes and cosmetics under license for Oscar de la Renta, Van Cleef & Arpels and Fendi.
Annual sales for the YSL Beauté division grew by 2.6 per cent, from €599 million in 2002, to €614.7 million. Gross profit plummeted by almost 50 per cent however, from €41.2 million in 2002 to €20.9 million for 2003.
Recovering from a two-year downturn in the luxury goods market the fashion group had a particularly difficult first half with the Iraq war and worries about Sars depressing high spending travellers.
Annual sales of Yves Saint Laurent make-up and skincare grew 9.6 per cent and 25.2 per cent respectively - based on a constant currency basis - accounting for two thirds of YSL Beauté's annual sales.
The Yves Saint Laurent brand continued its healthy growth in the make-up and skincare sectors, driven both by strong product collections and continuously improving positioning in key points of sale such as department store counter corners.
Gucci remains positive that sales in its YSL Beauté division will pick up again in 2004, despite the divisions fall in revenue for the last quarter of 2003.
"Constant currency sales grew 7.1 per cent in January, and this positive trend continued into February and March when constant currency sales grew 5 per cent," reported a Gucci Group spokesperson.
Overall the Gucci Group recorded a 1.7 per cent increase in annual revenue to €2.6 billion but saw a 23.2 per cent fall in net profit to €174.2 million.