Swedish cosmetics maker Oriflame eyes U.S., Brazil as next major markets

STOCKHOLM (Reuters) - Swedish cosmetics vendor Oriflame, which sells its products door-to-door like U.S. competitor Avon, said it aims to enter the United States and Brazil within a few years.

Its plans for the United States contrast with Avon, which is downsizing in its home market and recently sold most of its North American business to Cerberus Capital, its biggest investor, after four years of falling sales.

Oriflame’s Chief Executive Magnus Brannstrom, however, sees plenty of opportunity there and in Brazil, even though both markets require significant resources.

“They are huge direct selling markets with a very high degree of innovation and with many new companies in the U.S.,” Brannstrom told Reuters in an interview.

The company, which has more than 3 million sales agents selling everything from Oriflame skincare products to mascara, is looking to expand into new markets after being hit hard by turmoil in Russia, its biggest market.

Brannstrom said it could be selling in the United States and Brazil within a few years.

“That could go pretty fast,” he said.

“We’re obviously not opening up in the United States during 2016 and I would be incredibly surprised if we did so in 2017.”

Emerging markets will remain the focus of growth and China or India would probably overtake Russia to become the company’s biggest market over the long term, Brannstrom said. Turkey and Mexico are also major markets.

Falling sales in Russia and Ukraine, another important market, forced Oriflame to scrap dividends for the past two years. However, it reported better-than-expected fourth-quarter profits last month and said it would propose a dividend to be paid in the fourth quarter and the first quarter of 2017.

It has cut costs over the past three years and Brannstrom said it was hoping to be able to raise prices on its products.

“We think maybe we haven’t charged as much as we would have liked, as much as our products are worth,” he said.

Oriflame said in mid-February that its sales in local currency so far in the first quarter were up 9 percent from a year earlier. Brannstrom said 2016 had got off to a better start than last year and he was “cautiously optimistic” about the year.

“But we still live in a very insecure world with plenty of volatility. It will be very important for us to maintain our volumes in euros, to increase them this year.”

The company would continue to grow primarily organically.

“It could be however that either you can’t get into a market, or there’s a new product you want to have. Then it (acquisitions) might be interesting.”

Oriflame shares have risen 14 percent this year, rebounding on the company’s improving outlook.

Editing by Susan Fenton