The Sweet Smell of Fast Growth

But can L'Occitane retain its homegrown charm?

Commuters rushing through the dark corridors of New York's Grand Central Station can catch a whiff of Provence from a little boutique nestled in the eastern reaches of the sprawling complex. L'Occitane isn't much to look at: a small storefront, painted in a rustic mustard yellow. But inside--well, it's probably the best-smelling joint in Manhattan. Lavender soap, verbena bubble bath, shea butter hand cream: L'Occitane trades in fragrant potions. It sells what the French call l'état d'âme--a state of soul. And it doesn't come cheap. A 50-ml. jar of its Precious face cream goes for $35.

Founded in 1976 by a lefty student who made his own soap to sell at farmers' markets in the south of France, Manosque-based L'Occitane (that's Old French for "a woman of Provence") is now at a crossroads. The privately held company had sales of $80 million in 2001, but management is aiming for a 75% increase this year, as it expands globally. Amazingly, it also expects to make a profit, after four years of breaking even. "We've been fortunate, and now we want to expand as fast as we can with our resources," says CEO Reinold Geiger. He's planning 100 store openings this year, bringing the total to 340.

Of course, L'Occitane is not the first beauty company with global ambitions. Britain has given us the Body Shop and Crabtree & Evelyn. And Estée Lauder's Origins stores seem to be popping up everywhere. L'Occitane is opting for tony thoroughfares such as New York's Madison Avenue or Tokyo's Omotesando Street. Sales at its outlets range from $500 to $3,000 per square foot, which trumps the industry average of $500.

Geiger knows overexpansion could tarnish the image. "The Body Shop broadened distribution too quickly," says Wendy Liebmann, president of WSL Strategic Retail, a New York consultancy. "[So far,] L'Occitane has protected the quality of their environment." Geiger, 54, a former Austrian ski champion who bought a majority of L'Occitane in 1994, has ended franchising, for fear of debasing the brand.

Mercifully, Geiger's penchant for controlling every facet of the business hasn't crimped the creative instincts of L'Occitane's founder, Olivier Baussan. As chronicled in Peter Mayle's best-selling book, Encore Provence, Baussan, 50, is building a new business out of olives. Oliviers & Co., his six-year-old chain, boasts 50-plus stores selling pricey olive oils. L'Occitane is an investor.

Out of lavender and olives, Geiger wants to fashion an empire. Last October, he flew to São Paulo to inaugurate the first Maison de Provence: L'Occitane occupies one floor of the refurbished house, and Oliviers & Co. another. There is also a spa and a restaurant. Geiger is planning to introduce Maison de Provence to France and the U.S. next year. He just has to make sure his house keeps its foundations solid.

By Christina White in Manosque

    Before it's here, it's on the Bloomberg Terminal.