a number of celebrities have endorsed it, l'occitane has suspended trading and announced its delisting, and a guangdong mother said: i haven't used it for a long time...
2024-09-15
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september 13,
l'occitane shares officially ceased trading on the hong kong stock exchange.
according to the plan,
its listing status will be officially withdrawn on october 16.
l’occitane’s 14-year journey to listing on the hong kong stock market
entering the countdown phase.
as a french brand, l'occitane is well-known in china, and its hand cream is known as the "hermes of hand creams". in recent years, by signing celebrity spokespersons such as lu han, zhu yilong, gong jun, and zhao lusi, the company's revenue has increased significantly, from 600 million euros in the early days of listing to the latest 2.5 billion euros, an increase of more than three times.
as of the end of fiscal 2024, the chinese market is the group's second largest market globally.
14-year journey to list on hong kong stock market is coming to an end
l'occitane enjoys a high reputation in the chinese market. compared with the hand creams that are generally priced at tens of yuan on the market, l'occitane has become the representative of high-end hand creams with a unit price of hundreds of yuan and the positioning of natural raw materials. it is known as the "hermes of hand creams". in addition to hand creams, bath oils, scrubs, etc. have also become l'occitane's star products.
in 1995, l'occitane entered the hong kong market and in 2005, the mainland china market. on may 7, 2010, l'occitane was listed on the hong kong stock exchange, becoming the first french company to be listed on the hong kong stock market. in 2014, l'occitane went online for the first time after opening offline stores in the mainland for 9 years, and officially entered the mainland e-commerce platform; in 2017, l'occitane signed a contract with popular idol lu han.
the intensive actions have enabled l'occitane to achieve rapid growth in performance in the chinese market, with sales in china increasing from 100 million euros to more than 300 million euros in ten years.
source: l'occitane official website
but in july last year
there was a sudden news that l'occitane would be privatized.
in august last year, l'occitane announced that the controlling shareholder would make a conditional voluntary general takeover offer, and the specific plan was still under consideration. the potential selling price might not be less than hk$26 per share. but one month later, the controlling shareholder decided to terminate the transaction.
in april this year, the market also heard that reinold geiger, the billionaire owner of l'occitane groupe sa, would make an offer to acquire l'occitane, a deal that could value the company at approximately us$7 billion.
soon after, l'occitane announced that its controlling shareholder, l'occitane groupe sa, proposed to acquire all the company's shares that it did not currently hold, planned to privatize the company and delist the company's shares from the hong kong stock exchange, and proposed a cash offer price of hk$34 per share. in addition, blackstone group and goldman sachs also participated in the investment.
regarding this "premium acquisition", l'occitane once stated that this price was the highest price in the company's history since its listing on the hong kong stock market and was "sincere".
on july 23, l'occitane announced that 371 million shares of the offer were effectively accepted and most shareholders had no objection to the privatization. l'occitane agreed to the privatization and all remaining shares will be compulsorily acquired and transferred to the offeror on october 15, 2024.
the announcement on september 10 showed that the last trading day of l'occitane shares will be september 12, 2024 (thursday), and the company's listing status will be withdrawn at 9 am on october 16, 2024.
as of the close of september 12, l'occitane was trading at hk$33.7 per share, and the company's market value remained at hk$49.8 billion, or approximately rmb 45.2 billion.
china remains its second largest market worldwide
in recent years, l'occitane has successively acquired american cosmetics brand limelife, british luxury skincare brand elemis, north american high-end body care brand sdj, australian luxury functional skincare brand ga, italian fragrance brand dr. vranjes firenz, etc., increasing its investment in the high-end skincare and beauty market to increase its brand portfolio and expand the scale of the group.
judging from performance, l'occitane's revenue and net profit have generally been on an upward trend since its listing, but in recent years, revenue has continued to increase without increasing profits.
according to the financial report for fiscal year 2024, during the reporting period, l'occitane's full-year net sales increased by 19.1% year-on-year to 2.542 billion euros; operating profit decreased by 2.5% from fiscal year 2023 to 233 million euros, with an operating profit margin of 9.2%; net profit was 93.89 million euros, down 18.4% year-on-year. in fiscal year 2023, the company's net profit fell by 52.4% year-on-year.
in terms of single market, the chinese market became l'occitane's largest market for the first time in fiscal 2021, accounting for 17% of sales. in fiscal 2024, this proportion dropped to 12.9%, and the chinese market retreated to l'occitane's second largest market in the world.
high marketing does not bring high returns
although delisting from the hong kong stock exchange is a foregone conclusion, it does not mean that l'occitane will completely withdraw from the chinese market. in the 2024 fiscal year interim report conference call, the then ceo of l'occitane said that the group will significantly increase marketing investment and plans to open 10 to 15 new stores in third-tier and fourth-tier cities.
however, the reporter found that l'occitane's "highlight moment" in china has passed and it is facing growth difficulties.
from fiscal year 2022 to fiscal year 2024, l'occitane's revenue in the chinese market was 328 million euros, 298 million euros, and 327 million euros, respectively. in fiscal year 2023, it experienced its first decline in nearly a decade. in fiscal year 2024, it barely recovered to the level of fiscal year 2022 through a series of marketing and investment measures.
in its 2024 fiscal year annual report, l'occitane said: "except for the united states, japan and travel retail channels, the largest part of our marketing expenditure was invested in the chinese market of the traditional brand 'l'occitane', with sales growing at a double-digit rate driven by strategic social media and digital marketing activities."
this also means that l'occitane's sales in the chinese market will resume growth in fiscal 2024, mainly driven by "big-budget" marketing, but the conversion into profits has not yet appeared.
the financial report shows that in fiscal year 2024, l'occitane's overall marketing expenses increased by 57.3%, one of the reasons being increased investment in traditional and social media marketing. in addition, the reported operating profit margin calculated based on net sales fell by 2.0 percentage points to 9.2%, of which 4 percentage points were due to increased marketing investment to maintain brand development. the full-year net profit attributable to the parent company fell from 115 million euros in the previous fiscal year to 93.9 million euros.
but if you open the social media platform, you will find that people have mixed feelings about its products:
however, l'occitane, which has already been delisted from the capital market, no longer needs to explain to investors the necessity and return rate of large-scale marketing. in the face of the current intensified competition in the beauty and personal care market, how effective l'occitane's "playing style" will be, we will have to wait and see in the future.
have you ever bought l'occitane?
comprehensive from china fund news, national business daily, and netizens' comments
source: guangzhou daily
