L’Occitane retail sales slump in Hong Kong, but China growth remains steady

30-Jul-2019 - Last updated on 30-Jul-2019 at 23:26 GMT

L’Occitane’s retail sales in Hong Kong slumped by 18.8% in the quarter to June, as economic and social factors took their toll. ©L'Occitane

L’Occitane’s retail sales in Hong Kong slumped by 18.8% in the quarter to June, as economic and social factors took their toll.

This was a huge contrast from the cosmetic firm’s 25.5% growth in Hong Kong in the same period last year.

Growth in China remained steady at 8.3%, which the company attributed to a successful digital strategy that consolidated the strengths of its own online website, marketplace platforms and web partner channels.

Reinold Geiger, chairman and CEO of L’Occitane, said: “Our growth in China remained robust despite the prevailing global macroeconomic uncertainties and a high base.”

Growth in other markets

Globally, the group’s sales grew 18.8% at reported rates and 16.2% at constant exchange rates.

Sell-out sales accounted for 68.6% of net sales. This growth was primarily contributed by marketplaces and stores opened last year.

Compared to the previous year, sales of the group’s web sell-out channels, including Elemis Skincare, grew by 49.9% at constant rates. Same-store sales growth was 2.0%.

The firm’s core brand, L’Occtitane en Provence, saw growth recovery in markets such as Europe and Japan. In total, the brand grew by 4.1% at constant rates, which the company attributed to its successful product launches and seasonal campaigns.

“We are pleased about the accelerating sales growth of L’Occitane en Provence. It is also encouraging to see decent growth in more mature markets, such as Japan and Europe,” said Geiger.

Other geographic markets such as the US, Russia and Brazil also posted encouraging growth of 8.1%, 16.4% and 13.6% in constant currency respectively. All other countries grew by 18.7%.

Elemis shows its strength

The group also experienced massive growth of 253% in the UK due to the strong double-digit growth of Elemis Skincare, which reported a total unaudited growth of 9.3% in the first three months of FY2020.

According to the firm, Elemis experience “temporary weakness in the maritime channel” due to near-term inventory control measures. Excluding the maritime channel, Elemis’ growth was 23.8%.

Elemis also drove the company’s 43.1% sell-in sales growth at constant rates as compared to the same period last year.

“Elemis, our recent acquisition, is already having a pronounced impact on our top-line and will support our profitability in FY2020,” said Geiger.

He added that the company is planning Elemis’ expansion into APAC.

“We look forward to expanding this brand into new regions such as the Asia-Pacific in the coming months to maximise its potential. We also look forward to announcing new exciting product launches in the near future, which should further strengthen our foothold in the premium beauty market.”