Sales Exceed $2.18 Billion for L’Occitane International

L’Occitane International SA delivered strong double-digit growth against a challenging macroeconomic backdrop, for fiscal year 2023 ended March 31.

 

This included surging global inflation, widespread recession fears and a sharp Covid-19 related consumer pullback in China – one of its largest markets. Net sales grew 19.8% at reported rates to $2.33 million, exceeding the $2.19 billion mark for the first time. Excluding the impact of the deconsolidation of the US subsidiary last year, sales grew 17.9% at reported rates and 13.4% at constant rates.

 

The solid sales growth was contributed by the group’s newer brands, Elemis and Sol de Janeiro, as well as the resilience of the core L’Occitane en Provence brand, particularly its improved momentum in the final quarter thanks to the dynamic travel retail channel and early positive signs in China. On a like-for-like basis, (i.e. excluding Russia due to the group’s divestiture), the newly consolidated brands Sol de Janeiro and Grown Alchemist, the deconsolidation of the US subsidiary last year and at constant rates), sales growth was 3.7% in fiscal year 2023.

The group’s resilience within the global premium beauty sector was reflected in its healthy operating profit margin of 15.8% on a management basis, ( i.e. excluding accounting adjustments related to one-off impairments on the underperforming brands, Melvita and LimeLife, the divestiture of the Russian business and the share of losses of associates.) 

 

The group’s reported operating profit and net profit declined by 23.0% and 51.1% to $260.90 million and $129.01 million respectively, mostly as a result of the impairments on the two underperforming brands. 

 

As markets around the world reopened, the group’s retail channel in key markets recovered as customers sought to rediscover the sensory pleasure of its products and natural and organic ingredients in person. At the same time, its effective omni-channel strategy led to a more balanced channel mix, with dynamic growth in travel retail and the development of newer brands contributing to a marked sales growth of 50.9% in wholesale and other channels. The addition of digitally-centric brands Elemis and Sol de Janeiro to the group’s portfolio also supported the 4.8% growth in the online channel despite the recovery in the retail channel.
 

The ageless credentials of the group’s core brand, L’Occitane en Provence, along with its wide geographic footprint insulated its top-line performance against regional disturbances. Excluding the China and Russia markets, L’Occitane en Provence grew by 6.8% in FY2023. Its ability to stay agile in allocating resources amid market uncertainties allowed it to deliver a sound operating profit margin of 14.6% in FY2023.

 

Elemis grew 8.9% at constant rates in FY2023. In the second half of the year, Elemis took a strategic decision to reduce sales to certain promotion-driven web partners in the UK in order to protect brand equity. Although sales in the UK declined as a result, Elemis continued to show strong momentum and customer engagement, as evidenced by its ranking as the No. 1 skincare brand in earned media value in its largest markets, the UK and the US. Elemis’ lean and agile structure enabled it to secure a solid operating profit margin of 20.2%, the brand said.

 

Sol de Janeiro experienced incredible success in FY2023. In less than two years since the acquisition, it has grown to become the group’s second-largest brand with sales growth of 135.2% and an impressive operating profit margin of 24.6%.

In FY2023, the group also formalized its sustainability priorities with the unveiling of its new corporate mission: “With empowerment we positively impact people and regenerate nature, which acts as a guiding light to steer the actions of the entire organization with a collective focus on the triple-bottom-line — people, the planet, and profitability.” With that, the group’s overall sustainability performance was recognized with the EcoVadis Gold medal, placing it in the top 5% of assessed companies. After celebrating Elemis’ B Corp certification in January 2023, the group is well on track to become B Corp certified in 2023.

 

“We are cautiously optimistic as we head into FY2024. While the macroeconomic environment remains uncertain, we expect to achieve double-digit sales growth and healthy profitability, supported by significantly higher marketing investments for the core brand in key markets and channels, as well as for our new brands as they enter new markets, including the upcoming launch of Sol de Janeiro and Grown Alchemist in APAC,” said André Hoffmann, vice-chairman and CEO of L’Occitane. “We are convinced that these investments will not only allow us to capitalize on the clear opportunities this year with the gradual return of international travel and a rebound in China, but also to propel our development as a multi-billion Euro, multi-brand group in the years to come.”