Core Viewpoint - L'Occitane is shifting its IPO focus from Hong Kong to the US market, aiming for a higher valuation amidst a competitive beauty industry landscape [2][5][11] Group 1: IPO Details - L'Occitane was privatized in 2024 with a valuation of €6 billion (approximately ¥48.82 billion) after 14 years on the Hong Kong Stock Exchange [4] - The company is exploring the possibility of an IPO in the US as early as this year, having engaged JPMorgan and Morgan Stanley for the process, although specific details are still under discussion [4] - For the fiscal year 2025, L'Occitane reported revenues of €2.8 billion, an increase of approximately 11.7% from €2.5419 billion in the previous year, driven by its brand portfolio [4] Group 2: Market Valuation and Preferences - L'Occitane's decision to pursue a US IPO rather than returning to Hong Kong or entering the European market is primarily driven by the desire to enhance its valuation [5] - The valuation logic for beauty brands differs significantly between Hong Kong and the US, with Hong Kong beauty companies like Shiseido and Maogeping having an average P/E ratio exceeding 30, while leading A-share beauty brand Proya has a P/E ratio of about 21 [5] - The US market shows a higher recognition for natural and organic beauty products, which aligns well with L'Occitane's business focus [8] Group 3: Business Performance and Growth Drivers - L'Occitane's core focus on natural skincare and organic cosmetics has led to significant growth, with its body care brand Sol de Janeiro contributing 31.6% to group revenue in fiscal year 2025, a 460 basis point increase, and revenue reaching €884.8 million, up 29% year-on-year [8] - The brand's fragrance line is highly competitive in the North American market, with its Cheirosa mini body spray ranking first in Ulta's beauty sales, generating over $15 million in sales for a single $26 product [8] - The global cosmetics market is projected to reach $32.805 billion in 2025, with the US market expected to grow to $9.571 billion, reflecting a compound annual growth rate of 6.19% [11] Group 4: Competitive Landscape and Strategic Considerations - The beauty market is becoming increasingly competitive, with major players like L'Oréal dominating through comprehensive product lines and channel advantages, while domestic brands are expanding internationally [17] - L'Occitane's shift to the US market provides a new reference for beauty brands with global operations, emphasizing the importance of aligning capital market choices with business focus [17] - The upcoming IPO is not only a strategy for L'Occitane to secure a higher valuation but also serves as a case study for capital operations in the global beauty industry [18]

Core Insights - L'Occitane Group has faced significant changes, including leadership transitions and privatization, impacting its performance in 2025 [1][3] - The company reported a net sales of €2.8 billion (approximately ¥23.576 billion) for the fiscal year ending March 31, 2025, reflecting an 11.7% year-on-year growth [1][13] - Despite the growth, the increase in net sales has slowed down post-privatization, raising questions about the effectiveness of this strategic shift [1][13] Financial Performance - The net sales for L'Occitane reached €2.8 billion, with a year-on-year growth of 11.7% [1] - The company has maintained a consistent growth trend in net sales for four consecutive years since the fiscal year 2022 [1] - The main brand, L'Occitane en Provence, generated net sales of €1.355 billion (approximately ¥11.405 billion), accounting for nearly 50% of total sales [4] Brand and Market Strategy - L'Occitane has diversified its brand portfolio, now comprising eight high-end beauty brands, including ELEMIS and Sol de Janeiro [3][4] - Sol de Janeiro, acquired in 2021, is the second-largest brand with net sales of €885 million (approximately ¥7.452 billion), representing 31.6% of total sales [4] - The company aims to build a robust and flexible organization post-privatization, enhancing governance and brand autonomy [3] Regional Sales Performance - The Americas region accounted for the highest sales, with net sales of €1.299 billion (approximately ¥10.935 billion), making up 46.4% of total sales [6] - The Asia-Pacific region followed with net sales of €832 million (approximately ¥7.003 billion), while EMEA generated €666 million (approximately ¥5.606 billion) [6] Retail and Distribution Channels - L'Occitane operates over 3,000 retail stores globally, including more than 1,300 self-operated stores [8] - The number of retail stores increased from 2,774 in the fiscal year 2023 to over 3,000 in 2024, indicating a strategy to penetrate lower-tier markets [8] - The company has seen a reduction in self-operated store numbers, yet overall sales continue to rise, suggesting that store count is not the sole driver of revenue [10] Sales Channel Dynamics - The company has shifted its sales strategy, with wholesale and other channels contributing the largest share at 44.8% [11] - Online and retail channels are nearly equal in contribution, at 29.2% and 26.0% respectively, highlighting the growing importance of non-store channels [11] - The focus on optimizing store layouts and enhancing operational efficiency is crucial for sustaining sales growth [11]