By and  on September 19, 2005

PARIS — Groupe Clarins reported that its net profits for the first half of this year rose 13.3 percent to 34.8 million euros, or $42.5 million at current exchange rates, over 2004.At constant exchange, profits would have spiked 23.9 percent.Christian Courtin, company president and chief executive officer, told financial analysts during a meeting here Friday that a confluence of phenomena created an atypical first six months of 2005 for the beauty business in general. These included a stepped-up pace of retail partners' closures and consolidation — including A.S. Watson's acquisition of Marionnaud — and the subsequent steep drop in order taking, plus a patchwork of countries where markets remain economically tough.Despite such a variable context, and due in part to well-received launches, Courtin called his company's profits increase "very satisfactory."Its operating profits grew 2.7 percent to 47.7 million euros, or $58.3 million, in the half. As reported, Clarins' sales rose 6.3 percent to 460.6 million euros, or $559.5 million. For the second half, the reformulated Extra Firming line has just been introduced, as has the Thierry Mugler scent Alien for women. The new advertising campaign for Clarins' signature brand will continue to be rolled out, and product launches will include Azzaro's Silver Black fragrance for men (called Onyx in North America), Shaping Facial Lift, Radiance Plus Self Tanning, True Comfort Foundation and a fall-winter makeup story, according to Olivier Courtin, the company's vice president of research and development.The company expects to introduce a new skin care brand in the U.S. in September 2006.To further back its beauty and perfume divisions, the company will increase advertising spending this year, which is expected to impact Clarins' operating margin negatively by about one point for 2005.Christian Courtin reiterated that the company's performance is in line with guidance, and that Clarins is on track to hit its projected sales target of 1 billion euros, or $1.12 billion, this year. That would mean a 7 percent rise at constant exchange rates. During the question and answer session, Courtin was asked whether Clarins might be purchased by L'Oréal. It's a query that resurfaces in the industry from time to time, and it bubbled up again last week following a report in a recent edition of the French weekly newspaper Le Journal des Finances.The piece states that according to sources, L'Oréal is studying the possibility of buying Clarins, YSL Beauté or Estée Lauder's Clinique, among other names. It also says that no proposals have been made to those companies so far.Courtin said, "We have not been consulted by L'Oréal."Clarins stock closed down 3.28 percent to a unit price of 56.10 euros, or $68.50, on the Paris Bourse Friday.

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