L’Occitane reports mixed results for 2024 amid renewed push to privatize

25 Jun 2024 --- L’Occitane International announces its annual results for FY2024, achieving net sales of €25.4 billion (US$27.2 billion), a 19.1% year-over-year increase compared to last year. The company points out strength with its popular Gen Z brand, Sol de Janeiro which grew a whopping 167% while its flagship L’Occitane en Provence had a “steady performance”. 

However, net income dropped 18.6% to €93.89 million (US$100.8 million) and operating profit fell by 2.5% to €233.1 million (US$250.1 million). The Hong Kong-based company says it had to increase marketing investments in key markets and channels but saw retail sales recovery in China compared to last year. 

Brand breakdown
Sol de Janeiro delivered triple-digit growth across all geographies, which is said to be driven by the brand’s performance, the “ongoing success” of the Brazilian Bum Bum Cream, launches in the fragrance mist category and the release of limited collections aimed at establishing the brand’s “year-round appeal.”

L’Occitane en Provence underperformed relative to the company’s other brands regarding global growth and profitability.

Its other brand, Elemis, continued to focus on its “premiumization strategy” while accelerating marketing expenditures to drive expansion in all channels. Sales for the brand in FY2024 were “flat,” following marked sales declines in the UK and US in FY2024 Q4.

Ethical developments
L’Occitane International, as a certified B Corporation, aims to reduce its carbon footprint. Currently, 81% of plants in L’Occitane en Provence and Melvita’s raw materials are traceable to the plant’s country of origin, with the target to reach 90% by FY2026.

Sol de Janeiro’s financials performed well this fiscal year. (Image credit: Sol de Janeiro).Additionally, the company aims to pay each team member worldwide a living wage by FY2026.

Laurent Marteau, executive director and CEO of L’Occitane International, says: “Looking ahead, we remain cautiously optimistic about our performance in FY2025. However, the company’s additional investments in marketing, IT, supply infrastructure and people and planet investments will continue to weigh on our profit margins in the months and years ahead. These investments remain necessary for each of our brands to grow as competition in the global skin care and cosmetics industry intensifies.”

Ongoing privatization push
The mixed results come at a time when L’Occitane is still seeking to go private. In fact, last week it sweetened its bid, offering shareholders the option of receiving HK$34 (US$4.35) per share in cash or ten shares in the new private company for every share held.

Billionaire chairman Reinold Geiger made the initial privatization bid with Blackstone and Goldman Sachs in April. Geiger currently owns over 70% of L’Occitane’s shares. For any offer to succeed, the company needs the consent of at least 90% of minority shareholders.

By Sabine Waldeck