Perfume retailer struggles in developed markets

By Guy Montague-Jones

- Last updated on GMT

Related tags Eastern europe Western europe

Douglas Holding reported a drop in profits in the latest quarter as weak perfume sales in Western Europe contributed to the stagnation of its sales figures.

The Germany-based company posted 0.7 per cent growth for the three months ending June 30, taking net sales to €667.7m.

Eastern European expansion drives perfume results

Perfumeries account up the bulk of Douglas Holding’s turnover and performed better than its other divisions on the back of significant expansion in Eastern and Southern Europe.

Total perfume sales rose 7.4 per cent to €411.1m over the quarter but the growth came from emerging markets rather than the domestic market.

Douglas Holding is expanding its operations outside Western Europe with 78 new perfume stores opening primarily in Eastern and Southern Europe.

Last month the company also acquired a 51 percent shareholding in the Croatian perfumery company, IRIS, which boasts an annual turnover of around €20m.

Reliance on developed markets

Nonetheless, Douglas Holding remains reliant on Western European markets where consumer confidence has dropped in light of higher oil prices and the credit crunch.

“We have noticed that many consumers are not so quick to spend their euros,”​ said Dr. Henning Kreke, President and CEO of Douglas Holding.

As a consequence of the tough retail environment in the developed European markets and higher capital expenditure on expansion into more promising regions, Douglas Holding reported a net loss for the latest quarter.

The company recorded a loss of €1.2m compared to a net profit of €1.9m for the equivalent quarter last year.

However, for the first nine months of the year the figures were more encouraging with net sales rising 4.6 per cent to €2,415m and net profit falling only slightly to €87.6m.

Looking to the future the company remains focused on pursuing growth through the expansion of Douglas Perfumeries in international markets.

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