L’Occitane Q4 results: China now firm’s largest market after sales surge by 60%

L’Occitane International is the parent company of six brands – L’OCCITANE en Provence, Melvita, Erborian, L’OCCITANE au Brésil, LimeLife by Alcone and ELEMIS.

The Hong Kong-listed company reported that its sales accelerated to 12.5% in the fourth quarter of its 2021 financial year ending March 31.

This was driven by double-digit growth across all key brands, L’OCCITANE en Provence, ELEMIS and Limelife, which grew 10.2%, 24% and 29.2% respectively at constant rates.

China owns largest slice​

According to the firm, more than half of the growth was contributed by China, which has bounced back after the COVID-19 outbreak.

China recorded 60.0% growth in Q4, boosting it to become the group’s largest market in FY2021.

Markets such as Russia, Taiwan, Brazil, the US and the UK also posted good Q4 growth at constant rates of 23.6%, 17.4%, 9.4%, 9.0% and 5.1% respectively.

Hong Kong and France posted losses of 4% and 3.6% respectively, while Japan – one of the firm’s strongest markets historically, grew 2.4%.

Year-on-year, China also posted the largest sales growth at 36%. Taiwan recorded growth of 15.5% while Russia saw growth of 6.1%.

The rest of the markets posted declines ranging from 4.4% in Japan to 20% in Hong Kong.

L’Occitane’s physical retail channels continued to improve in Q4 despite trading with fewer stores as compared to the same period last year and the resumption of lockdown measures in some European countries.

Retail sales in Q4 decreased slightly by 1.1%, with around 15% of the group’s shops closed temporarily due to lockdowns during the quarter.

In total, the company shuttered 85 underperforming stores in FY2021.

Online outperforms

On the other hand, its online channels continued to outperform and ended FY2021 12M with impressive growth of 69.2% and accounted for 37.4% of total net sales.

In FY2020, online channels accounted for 21.7% of total net sales.

“We are proud of the progress we have made to adapt to a post-pandemic world, for instance in expanding online sales, which now account for more than one-third of our total sales​,” L’Occitane chairman and CEO, Reinold Geiger.

“This shift is just one facet of the major steps we have taken to restructure and re-position our business throughout FY2021, which has enabled us to deliver better results than we targeted at the start of the financial year.”​

Overall, the company posted net sales of EUR1.55bn for the full year, a slight decrease of 1.7% at constant rates.

L’Occtiane said this was a “strong result against a backdrop of COVID-19 restrictive measures worldwide.”​

“As we cross the one-year mark of the COVID-19 pandemic, our sales momentum has continued to accelerate, particularly in markets that have emerged from the crisis such as China. Besides a low-base effect in some markets, our decent performance was underpinned by the strength and resilience of our brands and our teams,” ​said Geiger.