L’Occitane starts FY23 with strong Q1 sales growth

For the first quarter, L’Occitane International S.A. saw a positive start to FY2023 with sales reaching 416 million euros, up 23.4 percent at reported rates and 15.8 percent at constant rates.

The company said in a statement that on a like-for-like basis, excluding the recently acquired brands Sol de Janeiro and Grown Alchemist, the Russia market due to the group’s recent divestiture, and the deconsolidation of the US subsidiary, sales growth was 5.1 percent.

Commenting on the first quarter results, André Hoffmann, vice-chairman & chief executive officer of L’Occitane, said: “After a positive start to FY2023, we stay optimistic about reaching our growth targets this year despite the prevailing headwinds. It is particularly pleasing to see the continued strong growth of the newer brands in our portfolio, which will play an important role in driving the group’s profitable growth.”

L’Occitane’s core brands and new acquisitions drive sales

The company added that the performance was driven by L’Occitane en Provence, Elemis and the inclusion of the new brands, Sol de Janeiro and Grown Alchemist.

The group’s core brand, L’Occitane en Provence, continued to grow despite a strong base of 36.1 percent growth at constant rates in the first quarter of FY2022. It grew 5.9 percent at constant rates, mainly driven by the rebound of retail, travel retail, web partners and distribution businesses.

Elemis grew 9.8 percent at constant rates, with key contributions from the US and international rollouts. The company further said that the sales in the US were particularly strong as the cruise ship business continued to recover and online channels remained dynamic.

Sol de Janeiro ended the quarter with 40.8 million euros in sales, an increase of approximately 60 percent in local currency as compared to the same quarter last year, prior to the acquisition. The growth was contributed by the successful global launches of the new Beija Flor range and premium perfume mists, together with further expansion outside the US.

Other brands together posted a 3.4 percent decline at constant rates. Erborian continued to grow by double digits while L’Occitane au Brésil posted around 50 percent growth. Sales of LimeLife were affected by the decrease in beauty guides and ended the quarter with a double-digit decline.

L’Occitane registers growth across geographic regions

In terms of geographic performance, the group recorded sales growth in all regions, with the fastest-growing region being the Americas followed by EMEA, growing respectively by 55.5 percent and 10.3 percent at constant rates during the quarter under review. Despite various headwinds, APAC – which remains the group’s largest region, grew 1.2 percent at constant rates.

Most markets in APAC posted double-digit growth, led by Hong Kong, Australia and Malaysia. The growth in the region was mostly offset by the high-teens decrease in China, with both offline and online sales severely impacted by Covid-19 outbreaks in April and May 2022. In addition to store closures, the group’s warehouse in Shanghai was also closed, causing disruption to store replenishments nationwide. However, the company said, sales rebounded strongly to double-digit growth in June 2022 as soon as conditions eased.

The group’s sales in the Americas grew 55.5 percent at constant rates in the quarter, contributed by the inclusion of Sol de Janeiro and the continued reopening of markets. All markets in the region posted double-digit growth and all brands performed well.

Sales in EMEA also rebounded in the quarter and grew 10.3 percent at constant rates, with strong contributions from travel retail and distribution sales in the region, as well as a rebound in retail sales in France and Germany.

Despite the strong bounce back in retail sales, the group’s online channels decreased slightly by 2.5 percent at constant rates and remained at a high level of net sales at 29.5 percent.

As of June 30, 2022, the total number of the group’s own retail stores was 1,375, representing a closure of a net 115 stores year to date. 110 of these net closings were in Russia as a result of the group’s divestiture from this market in June 2022.