Clarins sales struggle over the first half

By Guy Montague-Jones

- Last updated on GMT

Related tags: United states dollar, Clarins

Luxury beauty firm Clarins has lowered its expectations for the year after reporting a fall in net sales for the first half of the year.

The France-based company blamed unfavourable exchange rates and the challenging market conditions for its failure to increase turnover so far in 2008.

Exchange rates push sales down

Net sales for the six months ending June, 30, dropped 1.8 per cent to €485.8m. The strength of the Euro weighed heavily on the figures. At constant exchange rates, the firm achieved a sales increase of 4.1 per cent.

Performance in the second quarter was noticeably poorer than the first reflecting deepening consumer anxiety. While turnover dipped only 0.1 per cent in the first quarter, second quarter sales dropped 3.4 per cent.

On a geographical level, it was the developed markets of Europe and North America that were responsible for the damage.

However, the weakness of the dollar against the Euro was largely to blame for the drag on turnover from North America. At constant exchange rates sales rose 8.1 per cent in the region.

Perfume performs poorly

Breaking down turnover by product category, perfume was the worst hit sector with sales falling 8.4 per cent.

Clarins said the decline was caused by particularly fierce competition in the perfume industry and the high comparison basis from launches by Thierry Mugler and Azzaro in 2007.

Counterbalancing lower perfume sales was growth in skin care sales which pushed the beauty division to deliver growth of 1.2 per cent in the first half of the year.

On the publication of the sales figures, Clarins reduced its sales guidance to the lower end of its 4 to 6 per cent forecast.

Clarins is currently the subject of a takeover bid from the Courtin-Clarins family, which is its controlling shareholder.

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