Clarins warns that support for launches could squeeze margins

By Katie Bird

- Last updated on GMT

Related tags New product launches United states dollar President

After announcing a difficult first quarter Clarins warned
shareholders that new product launches and a strong Euro may affect
future margins, according to press reports.

However the France-based cosmetics company did reassure investors that revenue growth of between 4 and 6 per cent was still expected in the coming year. New product launches will depress margins​ During its annual shareholders meeting held on Tuesday Christian Courtin-Clarins noted that a number of new product launches such as MyBlend, the organic cosmetics line Kibio and new fragrances such as Porsche Design and Swarowski will affect 2008 margins. "These new initiatives will weigh on our margins in 2008 and 2009, but we have to lay the ground for the future,"​ said Courtin-Clarins at the meeting according to Dow Jones. In addition Courtin-Clarins again emphasised the company's aim to remain independent and confirmed its ongoing acquisitive intentions. The luxury cosmetics company has long been the subject of numerous take over rumours which the company has fervently denied. Leadership change​ At the same meeting it was confirmed that Philip Shearer would become president of the executive board as Christain Courtin-Clarins moves to become president of the supervisory board. Shearer joined the company earlier this year as vice president having worked at Estee Lauder and L'Oreal among other leaders in the industry. Last month the company announced its first quarter results which were negatively affected by unfavourable exchange rates. It reported a 0.1 per cent drop in sales to €240.1m for the three months ending 31 March, 2008 which at constant exchange rates would have been nearer 4.9 per cent sales growth. European sales for the quarter were particularly poor falling 0.8 per cent at constant exchange rates reflecting the high comparison basis for make-up and fragrance along with the relative weakness of retail sales in the region. However, in North America where many shoppers were staying away from department stores, Clarins succeeded in attracting more customers to its beauty counters than in the same period last year. The exchange rate nevertheless depressed the sales volume increase so sales increased by only 1.7 per cent at average exchange rates. In Asia and other emerging markets Clarins continued to perform strongly recording high double digit growth at constant exchange rates.

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