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L’Occitane International S.A. announced the unaudited consolidated interim results for the six months ended September 30, 2013. Profit for the period was €14.5 million for the six-month period, down 57.9% as compared to the same period of last year. Slower sales growth from Japan, one of the company’s key markets, foreign exchange fluctuations, notably from a weak Japanese yen against the euro, and pressure on profitability resulted from increased spending and investments were the major factors leading to the weaker performance.
At constant exchange rates, net sales increased by 7.2% for the six months ended September 30, 2013. Net sales for the period amounted to €446.4 million, a 0.6% or €2.9 million decrease from the same period of the previous year, mainly due to foreign currency translation effects.
During the period, the company continued to expand with new openings and important renovations in various markets globally. It also stepped up its marketing efforts in direct marketing, digital, advertising, research and development and international management despite a challenged macro environment. These efforts enabled L’Occitane to deliver growth in most markets at constant exchange rates during the period.
China and Russia continued to be the brand's best-performing markets, growing at 18.7% and 17%, respectively, at constant rates. Developed markets like France, the U.K. and the U.S. continued to contribute and maintain solid sales growth at 10.7%, 9.2% and 10.8%, respectively, at constant rates. The digital online channel remained one of the key areas of focus and growth for the company. The online retail channel maintained its momentum with 23.9% growth at constant exchange rates for the six months ended September 30, 2013.
At constant exchange rates, comparable store sales represented 7% of overall growth for the period while non-comparable store sales during the period represented 74% of overall growth, while the sell-in segment contributed 17.6% to overall growth. Aligned with its corporate strategy, the company continued to expand with new openings and significant renovations in various markets globally. For the six-month period, L’Occitane added 82 own retail stores to 1,280. The net addition of 82 stores included 40 in Asia, 20 in Europe, 16 in the Americas and 6 in Africa. At September 30, 2013, the total number of retail locations where its products are sold increased to 2,506. The number of renovated and relocated stores was 68 as compared to 42 stores over the same period last year.
Reinold Geiger, chairman and CEO of L’Occitane, said, “During the period under review, we have striven to balance revenue growth from the respective brands, increased investments and infrastructure efficiencies to drive sustainable long term profit growth across the group. Keeping focus on the long term, we aim to continue moving forward with confidence and will invest for the future while maintaining sustainable business performance.”
Looking forward to the second half, Geiger said, “The group will continue to execute our corporate strategy to expand its own retail network through opening more stores globally, upgrading existing stores in all our key markets, investing to strengthen our brands in our group’s portfolio, directing efforts to enhance our presence in the digital channel, and further improving our operational processes. We remain committed to our vision and will continue to invest and take advantage of potential business opportunities to create lasting value for our shareholders.”