10.26.22
L’Occitane, an international group that manufactures and retails beauty and well-being products that are rich in natural and organic ingredients, announces its unaudited quarterly update for the period September 30, 2022.
Despite ongoing headwinds in certain key markets, the group continued to build on the positive momentum achieved in fiscal year 2023 Q1. In the six months ended September 30, 2022, net sales amounted to $907.8 million, representing an accelerated growth of 24.2% at reported rates and 16.1% at constant rates. On a like-for-like basis, (i.e., excluding the recently-acquired brands Sol de Janeiro and Grown Alchemist, the Russia market due to the Group’s divestiture, and the deconsolidation of the US subsidiary), sales growth was 5.9%, another acceleration from 5.1% in fiscal year 2023 Q1.
“Despite a worsening of the global macroeconomic environment in fiscal year 2023 Q2, including persistent inflation, increasing interest rates and muted consumer sentiment in some markets, it is pleasing to see a further acceleration in top-line growth, both on an actual and like-for-like basis,” said André Hoffmann, vice chairman and CEO of L’Occitane. “This has strengthened our optimism about reaching our fiscal year 2023 targets.”
Despite strong 15.8% growth in this quarter, sales growth in the three months ended September 30, 2022 (fiscal year 2023 Q2) accelerated to 24.9% at reported rates or 16.2% at constant rates, thanks to the group’s dynamic new brands, rebound in travel retail and distribution and foreign currency exchange tailwinds. The situation in China, the group’s largest market in APAC that accounted for 13.0% of overall sales in fiscal year 2023 H1, also improved in fiscal year 2023 Q2.
Like-for-like growth in fiscal year 2023 Q2 was 6.7%.
Key Brands Sol de Janeiro, Elemis and L'Occitane en Provence Post Major Growth
All key brands posted growth in fiscal year 2023 H1, with major contributions from Sol de Janeiro, Elemis and L’Occitane en Provence. L’Occitane en Provence grew 9.4% at reported rates and 3.4% at constant rates. Travel retail rebounded stronger and earlier than planned.
Brick-and-mortar channels were dynamic while online channels normalized. In fiscal year 2023 Q2, despite the challenging market situation in China and the divestiture of its Russia business, L’Occitane en Provence maintained growth of 1.3%. Excluding Russia, the growth was 4.2%. Elemis also performed well in fiscal year 2023 H1 with 21.1% growth at reported rates and 13.1% at constant rates, mainly contributed by strong growth in the US and further international rollouts. The cruise line business continued to rebound while online and offline channels remained dynamic.
Sol de Janeiro ended fiscal year H1 with $95.38 million in sales, with more than 65% growth in local currency as compared to the same period last year. All channels posted encouraging growth, in particular chain wholesale, distribution and marketplace, thanks to well-received summer fragrances and the Bejia Flor range, as well as successful international rollouts to APAC and EMEA regions. Other brands together posted a growth of 12.7% at reported rates or 4.9% at constant rates in fiscal year 2023 H1. Grown Alchemist, Erborian and L’Occitane au Brésil remained dynamic while LimeLife and Melvita sales were sluggish.
In terms of regional performance, APAC grew 7.8% at reported rates and 1.9% at constant rates in fiscal year 2023 H1, with slightly better performance in fiscal year 2023 Q2. Most markets posted double-digit growth, led by Hong Kong, Australia and Malaysia. Yet, growth in the region was partly offset by the mid-teens decline at constant rates in China although the decline in Q2 narrowed from that of Q1. Hong Kong posted double-digit growth with dynamic growth in travel retail and distribution in the region, as well as a successful cross-border online business.
Americas grew 84.5% at reported rates or 59.8% at constant rates in fiscal year 2023 H1, with accelerated growth in Sol de Janeiro and Elemis. L’Occitane en Provence also posted decent growth. The US is now the group’s largest market in which it operates six brands, accounting for 25.7% of the overall sales in fiscal year 2023 H1. EMEA saw a rebound in fiscal year 2023 H1, growing 8.2% at constant rates, with strong contributions from travel retail and distribution sales in the region. Excluding Russia, the growth was 15.9% at constant rates.
All three key channels saw growth in fiscal year 2023 H1. Wholesale & others grew 50.9% at constant rates, with dynamic growth in wholesale chains, international distribution and travel retail. Retail also saw an increase in footfall and tourist sales and grew 4.4% at constant rates despite trading with 121 fewer stores. The total number of own retail stores was 1,380 as of September 30, 2022 representing 121 net closings year to date, of which 110 closings were in Russia. Online channels returned to growth in fiscal year 2023 Q2, leading to 2.2% growth at constant rates in fiscal year 2023 H1. The group’s online channels mix remained stable at 29.4% of total sales.