French beauty giant L’Occitane’s profit hurt by US tax reform
Hong Kong, Brazil, China and the US are its four fastest-growing markets
L’Occitane International, the first French company to go public in Hong Kong in 2010, on Monday reported a 27.1 per cent drop in annual net profit, as it was hurt by the US tax reform, increased outlay on marketing and one-off costs related to opening of new stores.
Net profit for the financial year ended March 2018 reached €96.5 million (US$113.6 million) compared to €132.4 million a year earlier, the company said on Monday. Net sales fell by a marginal 0.3 per cent to €1.31 billion.
“Despited ongoing foreign exchange headwinds and challenging retail environment in key markets, we made solid progress in emerging markets such as China, online channels, emerging brands and completed the acquisition of the brand LimeLife,” said Reinold Geiger, chairman and CEO of L’Occitane.
The US tax reform, which saw the biggest cut in US taxes, however resulted in a one-time increase in the effective tax rate for the company from 21.5 per cent in the previous financial year to 29 per cent in financial year 2018.
The skincare and fragrance maker is among a handful of US and European firms that are listed in Hong Kong, including luggage maker Samsonite and luxury giant Prada, as the city plays a more significant role in bridging investors between mainland China and the outside world through schemes such as stock connect schemes between Hong Kong and Shanghai and Shenzhen.
Just as its Western peers, L’Occitane has been cashing in on the aspiring middle class in China and other emerging economies like Brazil.