L’Occitane International’s shares
973,
fell sharply Tuesday morning after the beauty product retailer reported its net profit for the fiscal year ended March dropped more than 52%.
Shares were recently 19% lower at 18.28 Hong Kong dollars (US$2.33), and were headed for their largest one-day decline since the company’s initial public offering in Hong Kong in May 2010.
Net profit slumped to 115.11 million euros (US$125.6 million) for FY 2023 from EUR242.03 million the previous year, L’Occitane said in a Hong Kong Exchange filing after the stock market closed Monday. Operating profit dropped to EUR239.13 million in FY 2023 from EUR310.71 million in FY 2022, it said.
The decline in operating profit “was mainly due to impairments on two underperforming brands,” L’Occitane said in a statement. However, the company is “cautiously optimistic about its performance in FY 2024,” it added.
Although the macroeconomic environment remains uncertain, the company expects to achieve double-digit sales growth and healthy profitability, aided by the gradual return of international travel, a recovery in China and the continued expansion of its new brands, L’Occitane said.
Meanwhile, Jefferies revised down its FY 2024 and FY 2025 net-profit estimates for L’Occitane by 16% and 8%, respectively, the U.S. investment bank’s analysts said, noting management’s reduced operating-profit-margin guidance of 12% for FY 2024. Jefferies also lowered its target price for the stock to HK$30.20 from HK$34.70, while maintaining its buy rating.
This story originally appeared on Marketwatch
