L’Occitane interim profits dive by nearly half

French cosmetic retailer L’Occitane International S.A. registered a decrease of 47 per cent in its profit attributable to equity owners of the company for the first half of its fiscal year ended September 30, it told Hong Kong Stock Exchange on Monday.
For the six months, the company’s net profit totalled 19.4 million euros (MOP166.2 million/US$20.8 million), which is a drop of some 17.2 million euros compared to 36.6 million euros for the same period of last year. Nevertheless, the net sales of the company jumped 12.5 per cent year-on-year to 546.7 million euros. The increase was 5.7 per cent at constant exchange rates.
The retailer’s business in Hong Kong and Macau posted a drop of 12 per cent in net sales at constant exchange rates for the six months, amounting to some 58.1 million euros, posting a negative contribution of 23.4 per cent to the company’s overall growth.
In terms of business segments, the company’s sell-out sector in the two cities registered a drop of 14.3 per cent year-on-year while same stores sales growth posted a year-on-year decline of 16.2 per cent. The company said the decreases are due to ‘weak market sentiment and sharp decrease in Mainland Chinese tourists’
‘Business environment for sell-in segment was also challenged, in particular travel retail business in Asia. Travel retail sell-through was affected by the lagging effects of MERS in Korea and a material traffic drop in Hong Kong and Macau,’ the retailer claimed.
As at the end of September, the retailer had a total of 35 stores and 3 stores in Hong Kong and Macau, respectively.

Growth on the Mainland
Meanwhile, the company’s net sales in China surged by 20.4 per cent year-on-year at constant exchange rates, totalling 51.4 million euros for the six months. According to the filing, the market’s strong growth had contributed 26 per cent to overall growth of the company.
‘China had the highest growth of the Group, mainly driven by the quality new stores which have been opened during last and current financial years and sales to T-mall,’ the company remarked.
‘In the second half and beyond, the Group expects to drive sustainable growth endorsed by a committed management team with investment in business platforms, marketing and product innovations. The Group will continue to roll out refined format stores selectively in quality locations, especially in Asia, to replace those in weaker locations and positions,’ the company declared.