Catalogue helps fire Oriflame's sales
sales in Q4 boosted by the efficiency of the catalogue as a selling
tool, but operating profit was down.
Sales increased by 7 per cent in local currency in the quarter and 3 per cent in euros to €197.3m, compared to the same period last year. The figures were particularly healthy in Russia and Poland, where sales rose 13 per cent and 10 per cent respectively.
The operating margin, though, decreased to 16.5 percent resulting in an operating profit of €32.5m compared to €33.3m last year. Oriflame attributed this largely to currency movements and an increase in expenses mainly as a result of higher costs for recruitment programmes, improved delivery conditions - including free deliveries to loyal consultants in Russia - and expenses related to an extra catalogue in the CIS region.
Oriflame extolled the merits of its catalogue as its most important selling tool, adding that during the fourth quarter, it had launched an additional catalogue in the CIS region, which positively impacted productivity during the last two months of the year.
During this period Oriflame said it also launched a strong "limited-life" product programme to entice Christmas shoppers, and extended its anti ageing skincare product line by launching Time Prevent targeting the first signs of ageing.
In order to expand its profile, Oriflame has appointed Inge Heinsius as global marketing director. She joined Oriflame from Wella, where she had held several senior executive positions.
Oriflame said it expected sales growth to continue and operating margin to improve by 2-3 percentage points during 2005.
However, due to the weak sales growth in the second and third quarter of 2004, the company has initiated a number of actions for 2005, including catalogue and product development, further efforts to increase sales force and productivity and geographical expansion with an entry into China in the first half of 2006.
