Top Companies Report

18. Oriflame

August 2, 2013

Sweden
www.oriflame.com

Sales: $1.9 billion

Key Personnel: Magnus Brännström, president and chief executive officer; Jesper Martinsson, executive vice president, global sales and marketing and deputy chief executive officer; Gabriel Bennet, chief financial officer.

Major Products: Skin care, color cosmetics, fragrance, personal and hair care, accessories and wellness products.

New Products: Very Me Black Out mascara, Tender Care Almond balm, More by Demi fragrance, More by Demi.

Comments: The European debt crisis and a decline in active representatives continued to impact Oriflame’s results, as sales fell 1% last year due to a 5% decline in the number of units sold, partially offset by a 4% gain in price and mix. The company had a presence in 60 countries at the end of 2012.

Sales were weakest in Eastern Europe and Russia, which is Oriflame’s largest market and accounted for 54% of sales. Specifically, sales within the Commonwealth of Independent States and Baltic region declined 4% overall, due to a 6% drop in sales in Russia. The sales force fell 13% to 1.8 million consultants.

Sales in Europe, Middle East and Africa (28% of sales) fell 1%, even as the number of representatives increased 4% to 900,000. Although sales rose in northern Africa, Romania and Hungary, weakness in southern Europe hampered results. During the year, Oriflame acquired franchise businesses in Kenya, Tanzania and Uganda.

Sales in Asia (11% of sales) rose 12%, with the biggest gains in China, India and Indonesia. The sales force rose 5% to 500,000 consultants.

Sales in Latin America (7% of sales) increased 8%, driven by gains in Mexico. The number of Oriflame consultants rose 7% to 200,000.

In its annual report, the company reiterated its long-term financial goal of achieving a 10% gain in local currency a year and an operating margin of 15%.

By product category, color cosmetics accounted for 24% of sales, followed by skin care (22%), personal care and hair care (20%), fragrances (20%), accessories (9%) and wellness (5%).

The biggest initiative of 2012 was the partnership with actress Demi Moore for product development, endorsement and marketing. The collection of color cosmetics, body care and fragrance products under the More by Demi moniker was well-received by consumers, according to the company.

First quarter 2013 sales also fell 1%, but Brännström insisted the weakness that plagued the previous six quarters was in the past as the number of representatives increased.

Oriflame is turning its attention eastward to Russia with the opening of a new group distribution center in Moscow and the CIS
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