AS Watson's luxury division records 2013 sales up 3%

AS Watson’s luxury division – which includes The Perfume Shop in the UK, 1,100-store Marionnaud in France and across 11 other European markets, and 283-store ICI Paris XL in the Netherlands, Belgium, Luxembourg and Germany – also recorded 2% sales growth over Christmas from November 1 to December 31. Total sales for the calendar 2013 year stood at Euro 1.6bn.

AS Watson chief operating officer Malina Ngai told Retail Week: “Since 2009 and the economic downturn the luxury market has suffered. We had a few negative years and are pleased the division is now back into growth.”

Ngai said over Christmas, the UK and Benelux were strong performers, delivering sales growth of 6% and 9% respectively.

She said of the three main categories in the luxury sector – perfume, skincare and cosmetics – it was cosmetics that drove the growth. “Skincare and perfume were slightly negative but make-up was up 6.7%,” she said.

Ngai said when compared with AS Watson’s mass market division – which includes Superdrug in the UK and its flagship Asian brand Watsons – the retailer found that its customers were buying more mass market perfume, and, she added: “In the skincare category, there was lots of innovation in the mass market so that drew the customers there instead of the luxury end.”

She said the make-up category is often lower priced than the perfume or skincare categories, therefore it seemed customers were more prepared to spend there.

AS Watson owner, Hong Kong-based Hutchison Whampoa, has launched a strategic review of its retail operations and is considering an IPO. It appointed three banks – Bank of America Merrill Lynch, Goldman Sachs and HSBC, to carry out the review and is considering a possible dual listing in London and Hong Kong. A potential IPO could value the business at £15bn.

Ngai said: “We are a scalable business, with global coverage, and multi-brand. The review is ongoing and they [the banks] have told us that the quality of our portfolio is unique. They [the banks] will look at all the major stock exchanges but the review has only just started.”

Ngai said AS Watson’s luxury division will this year focus on store upgrades, consolidating its portfolio and digital operations.

The group as a whole, which has more than 11,000 stores operating 15 retail brands in 33 markets, wants to exceed 13,000 stores in 2015.

It has also been rolling out new technology for its ecommerce platforms, and Ngai said digital helps the retailer be more “customer-centric”. She said: “We have to offer what the customer wants and our digital channels are growing strongly.”

She added that AS Watson currently has 87 million loyalty members which gives the group “world-class analytics” to give more targeted offers.