L’Occitane International, a beauty product retailer, experienced a more than 52% drop in its net profit for the fiscal year ending in March. As a result, its shares saw a decline of 19% and were at their largest one-day drop since the company went public in Hong Kong in 2010. L’Occitane reported that net profit decreased to €115.11 million from €242.03 million, while operating profit declined from €310.71 million in FY 2022 to €239.13 million in FY 2023. The company noted that the decrease in operating profit was due to impairments on two underperforming brands.
Despite the uncertain macroeconomic environment, L’Occitane remains “cautiously optimistic” and expects double-digit sales growth and healthy profitability due to the gradual return of international travel, a recovery in China, and the continued expansion of its new brands. However, Jefferies, a U.S. investment bank, revised its FY 2024 and FY 2025 net-profit estimates for L’Occitane by 16% and 8%, respectively. Jefferies also lowered its target price for the stock to HK$30.20 from HK$34.70, while maintaining its buy rating.
