Author | Wang Xiaojuan

In today's weather is good. Today's weather is good.

Consumers have become more rational, and the "Hermes of Hand Cream" has also increased its revenue without increasing its profits, which has led to new developments in the capital markets.

On September 13th, the beauty giant L'Occitane, which has been listed on the Hong Kong Stock Exchange for 14 years, officially suspended trading of its shares until it withdraws from its listing status. As of the last trading day before delisting, L'Occitane had a total market value of approximately HK$49.7 billion (approximately RMB 45 billion).

This news has been circulating for a long time, starting from last year and finally reaching a result in April this year.

At that time, after a few days of suspension, L'Occitane resumed trading on April 30th. At the same time, Reinold Geiger, the chairman of L'Occitane, announced that he would acquire the remaining shares of L'Occitane at HK$34 per share, with financial support from Blackstone Group and Goldman Sachs. This price was 61% higher than the average price of the previous 60 days. On that day, L'Occitane's stock price rose by nearly 13% to a historical high of HK$33.5 per share, and closed at HK$33 per share.

In the face of the privatization decision, L'Occitane stated that in the increasingly competitive global skincare and cosmetic industry, the current management team hopes to push forward the company's long-term strategy more flexibly, without being bound by short-term interests of the public market, in order to better achieve the global expansion and market deepening of the brand.

Affected by the privatization news, l'occitane's stock price has remained relatively strong for the past 5 months, reaching a high of nearly HK$34 per share, close to the planned acquisition price.

Before delisting and privatization, l'occitane released its final financial report.

According to the 2024 fiscal year performance report, l'occitane achieved a net sales of 2.541 billion euros, a year-on-year increase of 19.1%, and a growth of 24.1% when calculated at fixed exchange rates.

Although the sales increased, the net income of l'occitane was 93.893 million euros, a decrease of 18.4% year-on-year due to high marketing expenses and other expenditures.

China, which l'occitane has been deeply rooted in for nearly 20 years, has also declined in the past two years.

Currently, China is l'occitane's second largest market, while around 2022, China was once its largest market. In the 2022 fiscal year, the sales in the Chinese market accounted for 18.4% of the total sales of the group. Over the next two years, it gradually declined, first to 14% in the 2023 fiscal year, and in the latest reported fiscal year, it was only 12.9%.

As the "Hermes of hand creams", l'occitane is not cheap. In the past few years, it has played a role similar to "high-end lipstick", targeting those who want to buy luxury brands but find it difficult to afford. At its peak, hand creams from l'occitane were popular among young women, with each of them owning a bottle.

L'occitane originated from the lavender homeland of Provence, France, and has a history of nearly 50 years. Combining natural plant extracts and other stories, it once spread in major shopping malls and has been successful in the era of sales upgrade.

However, with a unit price of nearly 100 yuan/30ml for hand cream, it is still too expensive in today's Chinese market where the average price of hand cream is around 34 yuan, and relying solely on hand cream as a product, it is also difficult to support the entire brand.

Although L'Occitane's shower gel, face cream, etc., have also entered Li Jiaqi's live broadcast room along with hand cream, the best-selling product is still hand cream. And in terms of product innovation, L'Occitane has not done much, using the same few products back and forth on a daily basis, which many first- and second-tier consumers have already grown tired of.

Furthermore, L'Occitane actively targets the sinking market, providing emotional value to wealthy women in county towns.

In third- and fourth-tier cities, consumers have more time and are willing to experience offline stores and trust recommendations from friends. L'Occitane is not particularly expensive, but it does have a certain brand premium, which just happens to meet the needs of consumers in this market. Furthermore, L'Occitane's gift boxes have become a new choice for many mothers and older people when giving gifts.

Last year, then L'Occitane CEO Andre Hoffman said the company would continue to expand into the Chinese sinking market, opening 10-15 new stores in third- and fourth-tier cities.

Up to now, L'Occitane has opened multiple stores in relatively high-potential third- and fourth-tier cities, with at least one store in most mainstream prefecture-level cities. Seizing the sinking market also means more opportunities.

For the past several years, L'Occitane's problem has been its relatively single product category structure. This privatization is also intended to deepen the market independently without being affected by stock prices.

After the privatization, the ability of L'Occitane to create classic best-selling products like hand cream again will depend on the specific performance of its products in the future.

At the same time, the global cosmetic and personal care market competition is becoming increasingly fierce, and l'occitane also needs more competitive strategies to maintain its position.