Channel shift: L’Occitane’s records brick-and-mortar recovery as online sales slide

L’Occitane International is the manufacturer of beauty and well-being products with brands such as L’OCCITANE en Provence, Melvita, Erborian, and ELEMIS under its banner.

The company saw its physical retail channels improve in the first quarter, growing 67.6%. It recorded same-store sales growth of 25%. It saw growth despite having 56 fewer stores as compared to the same period last year.

At the peak of the COVID-19 pandemic, the company closed more than 75% of its brick-and-mortar store network.

The reopening of the retail scene saw online channels normalise and posted a decline of 15.7% compared to the previous year’s 95.8% growth.

“After a solid FY2021, we are pleased to see our growth trajectory continue into FY2022. Importantly, even as stores reopen globally, the shift in our channel mix towards online has remained intact, demonstrating the success of our omnichannel distribution,”​ said Reinold Geiger, chairman and CEO of L’Occitane.

He added that the company will continue to restructure its store network, especially in the US, to improve its operational efficiency. In the first quarter, it closes 23 locations, mainly in the US.

Improving situation

Global sales momentum continued to improve for the company in the first quarter as the COVID-19 situation stabilised. L’Occitane’s net sales grew 27.7%, amounting to €337.2m (U$394.8m) in the first quarter.

L’Occitane en Provence and ELEMIS grew by 36.1% and 21.3%. Other brands in its portfolio, including Melvita and Erborian grew by 56%.

Limelife, however, saw sales tumbled by 32%. The company attributed the decline to the exceptionally high base of the previous year, which benefitted the online-only brand in the midst of the pandemic.

China contributed most to its overall growth, posting strong growth of 28.7%. It accounted for 16.8% of the company’s sales, ahead of only the US and Japan in size.

Markets that were heavily impacted by restrictive measures last year, such as Hong Kong, Brazil, Russia, and Japan rebounded strongly, recording double- and triple-digital growth.

In Hong Kong, L’Occitane’s reported sales growth of 127.5%. This was mainly driven by the travel retail channel, while the retail channel recorded mid-single-digit growth.

Brazil and Russia also grew by triple digits, recording a growth of 163.1% and 112.1% respectively. On the other hand, Japan grew by 25.1%.

In Europe, sales in France and the UK grew by 21.2% and 6.9% respectively. However, sales in Taiwan dipped by 5%.

“As recent outbreaks in the Asia Pacific region have shown, the COVID-19 pandemic is not yet over. However, we have already adapted a nimble mindset over the past year, leveraging our omni-channel presence and targeting our investments in key markets to safeguard our ongoing growth and profitability,” ​said Geiger.