L'Occitane

Credit Report for L’occitane

I. Business Overview

L’occitane is a French company which provides natural and organic ingredient-based cosmetics and well-being products with a strong regional roots in Provence. Mr. Olivier Baussan founded the company in 1976 with a steam distillation to produce essential oil from rosemary. The company soon opened a few more stores around France. But during 1993 the company experienced financial difficulty and was at the brink of bankruptcy. Mr. Reinold Geiger, the current chairman and CEO, bought a 33% stake in the company in 1993 and through a series of capital increase, became the major shareholder of the company in 1996. With Mr. Geiger’s involvement, the company started its international expansion strategy. Now L’occitane has opened 2082 stores around 90 countries and regions, with 1198 being L’occitane’s own stores.

The Company’s focus on organic and natural ingredient has cater to the taste shift of the consumer in current era. Its products with ingredients such as shea butter, immortelle and verbena, etc, are among the bestsellers in the industry. The Company currently sells its products under the brand names of L’Occitane en Provence, Melvita, Le Couvent des Minimes, and very soon will have another two brands: L’Occitane au Brési and Erborian.

The Company’s business consists of two parts: sell-out and sell-in. The sell-out segment refers to the direct sale of products to its end customers through its own branded stores and website, which contributes 73% to its sales growth. The sell-in segment refers to its products sales to intermediary agents such as distributors, wholesalers, airline companies and hotels, etc, which contributes 27% to its sales growth in 2013.

The Company operates in an integrated business model. It integrates its design, manufacturing, R & D and marketing together, which provides it excellent visibility and control over its supply chain. It invests heavily in SAP in recent two...