PARIS — The cost of closing its Thierry Mugler Couture operations drove Groupe Clarins to a net loss of $8 million during the first half of 2003.
Dollar figures are converted from the dollar at current exchange as Clarins reported a loss of 7.1 million euros.
The total aftertax cost of the discontinuation amounted to $38.9 million, or 34.4 million euros, Clarins said. Its impact on Clarins’ cash situation was estimated by the company to be $30.8 million, or 27.2 million euros.
Christian Courtin, president and chief executive, said during an analyst meeting Friday that it was “absolutely necessary” to shutter the couture business to end the losses. He added Clarins’ future is in beauty, which registered sales of $472.7 million, or 417.9 million euros, down 1.8 percent at average exchange but up 6.7 percent in local currencies.
Courtin called the latter figure “among the best growth in the sector,” and added that the firm had reached its objectives in the period, improved margins among them, despite a host of obstacles, including the war in Iraq, SARS and stagnating consumption.
Clarins’ operating margin improved in the half to 10.5 percent of sales, or 11.7 percent at constant exchange rates, versus 9 percent in the first half of 2002. That was on an operating profit of $49.8 million, or 44 million euros, up 14.8 percent, or 38.9 percent on a like-for-like basis.
Net profit excluding couture rose 1.6 percent, or 38.8 percent on a like-for-like basis, to $30.9 million, or 27.3 million euros, in the period.
Net debt was reduced to $106.6 million, or 94.2 million euros, at the end of June, from $131.3 million, or 116.1 million euros, at the end of 2002.
As the second half unfolds, numerous products will be launched by Clarins, including Super Restorative Serum for the 50-plus set and the Instant Light illuminating pen.
Optimistic about the future, Courtin said Clarins’ sales for July and August together rose 12 percent at constant exchange rates, putting them on track to exceed the 5 percent sales increase it projects for yearend 2003.
Analysts lauded the uptick. “This rapid growth in July and August was impressive,” said Eva Quiroga, an analyst at UBS, “but I don’t think it’s going to last. Clarins is coming up against a tough comparison.”
For instance, the firm ended 2002 with a 19 percent fourth-quarter sales increase, excluding structural and currency changes.
However, Quiroga said she believes the 2003 projection is “safe — Clarins will probably do better than the target.”
Clarins management also expects an increase in operating margin for the full year.
Clarins stock closed Friday up 3.8 percent at $56.90 a share.
La Prairie’s Gem
NEW YORK — If diamonds are a girl’s best friend, what might a microdermabrasion system containing such jewels be to women?
La Prairie’s Systeme Suisse Microdermabrasion, set to debut in January, uses refined natural diamonds, freshwater pearls and crystal quartz to exfoliate the surface layer of skin. Then, Advanced Moisture Complex, which contains vitamins A, C and E; arnica; calendula, and sea botanicals, energizes and rejuvenates the skin’s appearance.
“We used an array of ingredients that are different from what’s out there,” said Lynne Florio, president of La Prairie, part of Beiersdorf’s prestige division. “I think there’s a big difference in the texture of these products versus other products.” She explained that because La Prairie’s products are priced higher than most, the company “can afford to put everything in at a higher level and can always do it in a different way.”
Systeme Suisse retails for $350 and consists of the Cellular Microdermabrasion Cream, Cellular Softening and Balancing Lotion and three sponge applicators that come in different levels — a white sponge for the face, pink for the body and black for the heels and callused areas. A plastic tray that holds the sponges and their silver handle, as well as the cream and lotion, is packaged in a silver-and-white box. Florio noted that from the packaging to the product, La Prairie has attempted to make luxurious “a process that might not feel so elegant.”
While the company declined to comment, industry sources estimate that Systeme Suisse Microdermabrasion could generate sales of approximately $5 million in its first year at retail.
The company’s U.S. distribution comprises about 280 doors. Systeme Suisse’s distribution is still being finalized, although it will be available in Neiman Marcus and Saks Fifth Avenue doors. It will launch internationally in April.