L’Occitane sales rise on celebrity endorsements in China

Former EXO member Lu Han leads French brand’s endorsements in country

PUBLISHED : Monday, 12 June, 2017, 11:32pm
UPDATED : Monday, 12 June, 2017, 11:57pm

L’Occitane, the first French company to go public in Hong Kong, reported record annual earnings since its initial public offering in 2010 as the beauty product maker’s collaboration with Chinese heartthrobs and investment in e-commerce channels started to bear fruit.

The company saw its net profit for the 12 months to March rise 16.6 per cent to 132.4 million (US$148.2 million), surpassing the consensus estimates of analysts polled by Thomson Reuters.

Net sales jumped 3.2 per cent to 1.32 billion, boosted by a 11.8 per cent gain in e-commerce sales.

Successful celebrity endorsements helped China become one of the biggest growth engines for the European skincare brand, with net sales up 11 per cent from a year earlier to 139 million.

Last year, L’Occitane landed pop singer Joker Xue Zhiqian as its first spokesperson in mainland China, while speculation had long been rife that pop idol and former EXO member Lu Han would become its new brand ambassador. The official announcement of Lu’s endorsement campaign was made in May.

“Our China business has had a very strong turnaround in the second half of last year ... This is linked to the consumer confidence in China and our celebrity campaign with Lu Han,” Andre Hoffmann, president of Asia-Pacificn for L’Occitane, said in a post-earnings briefing with reporters on Monday.

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Lu, a former member of the South Korean-Chinese boy band EXO, boasts of an enormous teenager following in the Chinese-speaking community and appearances in popular television programmes as well as blockbusters such as The Great Wall. He also performed in the tremendously popular Chinese Lunar New Year Gala.

“Collaboration with Asian A-listers would add fuel to the brand’s sales going forward,” Ocean Pan, an analyst with Phillip Securities, wrote in a note.

Brazil and Japan were also singled out as the top performing markets for the Provence-based company, thanks to successful television commercials and stellar online sales figures.

L’Occitane opened 51 new outlets last financial year, including net additions of 31 stores in Brazil, 15 in China and 11 in Japan. It closed two boutiques in Hong Kong.

Net sales in Hong Kong decreased 10.3 per cent to 124.3 million due to dismal tourist numbers, heavy discounts and the strong Hong Kong dollar.

“We have had two rough years in a row, starting with Occupy Central. It hasn’t really improved in the past few years, but we’ve seen an improvement in the new financial year,” Hoffmann said.

L’Occitane International’s Hong Kong-listed shares ended 1.95 per cent higher at HK$15.70 on Monday ahead of the earnings announcement.