Skincare launch soothes Yves Saint Laurent

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The Independent Online
A NEW line of Yves Saint Laurent skincare products has enabled the French luxury goods group to maintain momentum at a flat time for clothing sales.

However, the launch did not prevent a sharp fall in profits, the company revealed yesterday.

Yves Saint Laurent's results showed that net profits slid from Fr41m (pounds 4.7m) to just Fr2.6m in the first half because of higher costs and taxes.

Total group sales rose by 6.8 per cent to Fr1.39bn.

Operating profits slipped from Fr130.6m to Fr94.6m, hit by the cost of the skincare products launch, which has a promotional budget of Fr100m.

Without beauty products, operating profits would have been 18 per cent higher.

The fashion house also forecast that full year sales during 1992 would be up by about 4 per cent, with a net profit margin of around 6 per cent.

The new line of skincare products, Soin Precurseur de Beaute, launched last spring, gives Yves Saint Laurent a strong presence in a sector of the beauty products market where it has so far failed to make a mark.

Pierre Berge, chairman, has grand ambitions for the Precurseur line, which has not yet been launched in the United States. A new factory was opened this year. The new line is expected to break even in 1993.

Skincare products are second only to scent in the international beauty products market.

They account for 30 per cent of beauty product sales in France and as much as 50 per cent in Japan.

The first contribution from the new line pushed up sales in the perfume division by 8.2 per cent to Fr1.1bn.

Luxury goods houses in Paris are placing increasing emphasis on beauty products to compensate for stagnant sales of clothing. Yves Saint Laurent Couture sales grew by only 0.9 per cent to Fr258.5m.

The group has invested Fr10m in a new designer, Robert Merloz, who showed his debut ready-to-wear collection in Paris two months ago.

The collection by the 26-year-old Frenchman received a lukewarm reception.

His contribution in the second half is not expected to be significant.

Yves Saint Laurent is likely to obtain greater returns from the launch of a new women's scent in late 1993.