Beiersdorf AG
XETRA:BEI
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Beiersdorf AG
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Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome, and thank you for joining the Beiersdorf Conference Call Q1 2020 Results. [Operator Instructions] I would now like to turn the conference over to Mr. Jens Geißler, Head of Investor Relations of Beiersdorf AG. Please go ahead.
Thank you. Good morning, everyone. I would like to welcome you to Beiersdorf's First Quarter Conference Call. This is Jens Geißler, and here with me in our Hamburg offices is our CEO, Stefan De Loecker; and our CFO, Dessi Temperley. We would like to share with you Beiersdorf's business results of the first 3 months of 2020. The main sales figures were already pre-released on April 2. We will start as always with a brief presentation which you can access through the link in your invitation. [Operator Instructions] And with that, I will now hand over to Stefan De Loecker.
Thank you, Jens, and good morning, ladies and gentlemen. I'd also like to welcome you to today's conference call. Today, we'll report on a quarter which was under very special circumstances in view of the current corona pandemic. It was shaped by the beginnings and the subsequent spread of the coronavirus, which has changed and impacted the lives of our society, consumers and our business. From the very beginning, we focused on 3 things: first, protecting the health and safety of every employee around the world remains our highest priority. Secondly, safeguarding and successfully continuing our business by adapting our offer to the rapidly changing expectations and shopping habits of our consumers, while ensuring a stable supply capability. And thirdly, doing our utmost to help society battle COVID-19. The corona pandemic has had a significant impact on our quarterly results. Group sales fell by 3.6% in organic terms. They stood at EUR 1.910 billion in nominal terms, down 1.9% on the prior year figure.Sales at the Consumer Business segment declined by 3.3% and at the tesa business segment by 5.1%. Our Derma and Healthcare brands have weathered the crisis well and produced strong digit -- double-digit sales growth. At the same time, NIVEA suffered a slight decline. Our selective cosmetics brand La Prairie was hit particularly hard by the collapse of travel -- international travel and business in China, and recorded a 35.8% decline in sales. The impact of the coronavirus crisis was reflected in particular in 3 areas of our business in the first quarter.First, the consumption behavior in consumers are changing. We're seeing far stronger demand for essential personal care products such as soap, hand wash and hand cream, thereby trusted and familiar brands gained preference. Spending significant more time at home drove a shift in media consumption, with specifically increase of online. Secondly, the lockdown has dominated our lives and business over the past 2 months and will have a longer term effect. The limited mobility paired with partial store closures drove online sales, both by existing consumers and by attracting new consumers who made their first experiences. When people went to brick-and-mortar stores, they try to limit their in-store time and the size of the shopping basket increased. Sales effects from planned consumer activations in retail were delayed.Thirdly, as I mentioned, La Prairie has been hit hard by the collapse of international travel. Markets of the tourism industry, an area where we are active, in particular with our sun protection products, are suffering along with the travel retail business.We immediately started to deploy measures to mitigate the impact of the corona crisis on our operations. We placed a special focus on the stable sourcing situation in order to largely maintain our accustomed high service level. Targeted cost-saving initiatives will mitigate the long-term economic impact of the coronavirus crisis on our business. Apart from steps to reduce material costs and disciplined management of fixed costs, we've concluded our solidarity pact, an agreement that will also help us cut personnel expenses. I will return to that later. At this stage, we focus on what we can influence right now. We are determined to do everything we can to keep the company on its strategic course and adapt to the changes in this times -- time of uncertainty.The relevance and long-term orientation of our C.A.R.E.+ strategy has never been so tangible as they are right now, in these times of crisis. This is why we will continue to invest in the initiatives related to C.A.R.E.+ in spite of the huge economic challenges we face, in digitalization, skin care innovations and the tapping of new growth markets. We're doing all this in a responsible and sustainable manner given our determination to continue to significantly boost our contribution to sustainability. We remain committed to C.A.R.E.+ resolutely and without compromise.Ladies and gentlemen, in recent weeks, our teams have been working around the world to remain close to our consumers during today's challenging times and to provide them with the very best support possible. We have adapted agilely to changing consumer needs, reworked media plans and modified our product assortments. Values like trust and caring for one another are becoming important once again. And care is exactly the thing that has characterized Beiersdorf for more than 135 years. We fulfill consumer wishes in the best possible way if we maintain a close relationship with our consumers. This is why we focus on a digital dialogue with consumers, a practice that has never been so important as it is today.More than ever, consumers are using digital media of searching for suitable skin care products and are buying them online. Further, it was clear long before the COVID-19 pandemic the rapid expansion of digitalization is a key success factor. For this reason, we boosted our investments in digital media by 43% in the first quarter, and we're able to significantly boost e-commerce in the first quarter of 2020, even before the virus began to spread around the world. We increased our sales here by 23%.In mid-April, we introduced our new web app, a digital innovation. This app is able to virtually determine the individual skin needs of female users. The NIVEA SKiN GUiDE draws on the results of this analysis to inform users about their skin's true needs. With the app's help, consumers gain personal care tips and individual product recommendations. The app is based on the research data of more than 10,000 women. A total of 12 million photographs were evaluated on the basis of 11 parameters that included redness, depth of wrinkles and skin impurities. Information about lifestyles and care habits flow into the evaluation as well.This new digital tool will significantly improve skin diagnosis for women around the world. It will also bring us even closer to our female consumers and their individual skin care needs. This will enable us to provide personalized assistance based on individual needs right at home.We also made progress in the area of innovative skin care during the first quarter. At the annual press conference we held last week -- I'm sorry, at the beginning of March, I already mentioned the revolutionary Eucerin Anti-Pigment range with a patented ingredient Thiamidol that fights hyperpigmentation has been one of the most successful product introductions in Beiersdorf's history.The product range helped to significantly fuel growth in the Derma segment during the first quarter of 2020. Sales generated by the Thiamidol product range jumped by 43% compared with the previous year. Eucerin Anti-Pigment is and will remain the market leader in the even skin category and already enjoys a high level of acceptance among consumers. This huge success was also the reason why we presented a new launch with the Thiamidol ingredient in Q1, Eucerin Sun Pigment Control LSF 50+. This new product not only protects skin from harmful UV radiation and its effects, but also helps visibly to reduce pigment spots. We are preparing other market introductions in the area of sun protection care for 2020.Ladies and gentlemen, changing consumer needs in regards to naturalness and sustainability prompted us to expand our line of care products that are made of natural ingredients. This crisis will not change that either. We entered the growth segment of natural cosmetics with the new NIVEA NATURALLY GOOD line in Europe at the end of 2019. This range compromises products that are made up of at least 95% natural original ingredients and has beaten our expectations. We're also getting great feedback from consumers themselves.The NIVEA NATURALLY GOOD line is now being sold in 28 countries in Europe. Other countries outside Europe will be added later this year. We also plan to add other product categories through this care line in the future, including deodorants as well as anti-aging and skin cleansing products, and we will remain committed to total transparency and uncompromising quality.Over the past few months, I've already presented our OSCAR&PAUL venture capital fund to you in more detail. The unit invests in companies and start-ups and gives us further access to promising technologies, new business models or skin care innovations. Today, I like to announce our latest investment to you, our stake in the British company, Salford Valve Company Ltd., Salvalco. It represents an investment in sustainable valve technology and thus, in sustainable packaging solutions.Salvalco develops innovative aerosol valves or Eco-Valves. This Eco-Valve technology facilitates the use of environmentally-conscious propellants, including fresh air and nitrogen. It represents a sustainable alternative to conventional aerosol propellants and fits right into our new sustainability agenda Care Beyond Skin and the commitment we have made as part of C.A.R.E.+. We attempt to jointly expand the reach of this promising and patented technology. We plan further to use sustainable valve solutions in our own global pipeline as well.Ladies and gentlemen, I mentioned it at the beginning. Beiersdorf took actions at the very early stage to protect its employees during the COVID-19 pandemic. Working from home was a major part of this effort, just one of the many steps we took fast and agile. We have also provided the largest globally coordinated humanitarian aid program in our company's history. It is a EUR 50 million program aimed at supporting the battle against COVID-19. It is also an expression of our purpose, Care Beyond Skin. We converted individual production lines on 5 continents to produce medical disinfectants in the shortest space of time. We've provided hospitals and medical personnel with 1 million liters of disinfectant.We have also distributed 5 million skin and hand care products around the world that medical personnel can use to treat their particularly stressed skin in gratitude for their tireless efforts during this difficult time. We are providing direct financial support to the global and local relief projects of our partner organizations and also helping by doubling the personal donations made by our employees to international aid organizations.Safeguarding our business during the crisis is another top priority that we have set in addition to protecting our employees' health and providing immediate relief assistance. In order to cushion the potential financial effects on Beiersdorf as best as possible and with foresight, we are planning savings in particular in the area of material costs. We have also adopted an agreement known as the solidarity pact so as to achieve the likewise necessity cuts in personnel expenses in a balanced way and with the spirit of solidarity, because solidarity is the core that will get us through this crisis together. Our solidarity pact means we bear the burden in the crisis together. It's our solution in order to safeguard jobs long-term during the pandemic, continue our C.A.R.E.+ investment so as to future-proof our business and to express the solidarity and spirit of community among all Beiersdorf employees. In order to jointly support this far-reaching measures, the scale of the solidarity contribution is differentiated according to the employee's pay grade.The further development of this crisis is still difficult to predict. It may be that the situation worsens before things pick up again. But I can clearly state one thing today. Beiersdorf's foundations are strong. We will march and overcome this unprecedented crisis together. We're all doing all in our might to emerge from this exceptional situation stronger.I'd like now to hand over to Dessi Temperley, who will present the financial results for the first quarter.
Good morning to everyone from my side as well. Let me start with the key figures of the Beiersdorf Group and our business segments. Group sales decreased organically by 3.6%. A combination of negative foreign exchange impact of 0.7% and positive structural changes of 2.4% led to nominal growth of minus 1.9%. Consumer sales decreased organically by 3.3%. M&A had a positive net effect of 3%, while foreign exchange a negative 0.7%. This led to a development in nominal sales of minus 1%. tesa sales decreased on a like-for-like basis by 5.1%. Including negative FX impact of 60 basis points, tesa reported nominal growth of minus 5.7%.Taking now a closer look at the sales development of our consumer business. On the strong organic growth base of Q1 of last year, we now report an organic sales decrease of 3.3% for the first quarter of 2020. As a reminder, the sales growth of Argentina is calculated based on current year average exchange rate. Therefore, reported organic growth includes the continuous material devaluation of the Argentine peso. If the sales growth of Argentina [indiscernible] currency rates as for all other countries, the consumer organic sales would be at 3%.We now move to our performance by region, starting with Europe. Sales in Europe decreased organically by 6.8%. Western Europe sales slowed down on a like-for-like basis by 9.6%, the main reason being significantly weaker sales in March in early lockdown countries like France, Italy and Spain. An equally important factor was the collapse of the travel retail business, which had a major negative impact on the sales of La Prairie. Beyond the travel retail segment, the majority of our La Prairie doors were closed by the end of March. In many countries, La Prairie had online sales only during that period. On a positive note, in Germany, despite the difficult overall conditions, we saw good growth in the first quarter. Eastern Europe achieved strong growth of 5.4% despite this challenging environment. This growth was mainly driven by Poland and Russia, while Ukraine, Romania and Hungary also performed rather well.In the Americas, our top line grew by 10.6% on a like-for-like basis. Adjusted for Argentina reported at constant currency, growth would have been at 12.7%. Our business in North America delivered organic sales growth of 1.3%. Strong growth in Derma was offset by the reduction of La Prairie sales in the U.S. The nominal growth of 48.1% in North America is related to the additional sales from the Coppertone acquisition. In Latin America, we saw sales increasing by 18.9%. Adjusted for Argentina at constant FX, we delivered even higher growth of 23%. In Brazil and Chile, we reported strong double-digit growth rates with very solid performance rates in the rest of the continent as well.Lastly, in the Africa, Asia and Australia region, sales decreased organically by 5%. The negative result was impacted significantly by contraction of our La Prairie business in Asia. Looking at individual countries, India had the strongest negative growth momentum in March, particularly after the imposed lockdown restrictions. On the other hand, Malaysia and the Philippines continued to have strong double-digit growth.Turning now to our tesa business. The impact of the corona crisis on the global economy was more strongly felt in our adhesive division where we saw a like-for-like sales decline of 5.1% in Q1 of this year. The Direct Industries segment was materially impacted by the slowdown in both the automotive and electronics industries. Resuming activities by the Chinese electronics manufacturers towards the end of the quarter had some mitigating positive effect as orders picked up in March. In the full quarter, growth in Direct Industries decelerated by 8.5%. The Trade Markets segment showed a more resilient development helped by the do-it-yourself segment and online sales with flat like-for-like sales compared to Q1 of 2019.This concludes my comments regarding first quarter sales. And now I hand back over to Stefan for his closing remarks.
Thank you, Dessi. Ladies and gentlemen, under normal circumstances, I would comment on our guidance for the current fiscal year 2020 at this point. A reliable estimate is not possible at present in view of the coronavirus crisis, its dynamics and the numerous factors influenced by it. Nevertheless, I'd like to highlight a number of points with regard to fiscal 2020 from the past weeks and months.As mentioned in the outset, we can see a shift in consumer and shopper behavior during the crisis. We cannot put a figure on the long-term impact. But one thing is certain. The coronavirus will leave a mark, also in light of the anticipated recession. We mitigate the long-term economic impact of the coronavirus on our business by means of targeted cost saving initiatives. Under the solidarity pact I talked about before, we advise so far taking an approach that strikes a healthy balance between future-proofing our company and broad solidarity while explicitly declining to use the personnel measures and tools available to us in this crisis.We are well positioned in the crisis to ensure a reliable supply chain and supply situation. The economic consequences of the coronavirus crisis will also be sharply felt by Beiersdorf in the second quarter. However, it's not possible to plan what will happen in fiscal 2020 with any degree of accuracy. We have to focus and focus on what we can influence now and what we can improve for consumers and society.Ladies and gentlemen, tough times are ahead of us. We cannot see into the future, but I want to repeat, we have a strong financial position and are steadfastly determined to do everything we need to stick to our strategy and steer Beiersdorf through this crisis. It's in our own hands to keep acting as resolutely and responsibly as we have previously done and did before the crisis. That is the essence of our company. As we adapt to this change, the principles of our C.A.R.E.+ strategy remain the same. We are consumer-centric company that arose and then fulfills the wishes of consumers worldwide, digitally in skin care and sustainably. I thank you for your attention, and now I hand over to Jens for the Q&A session.
Thank you. We will now start the Q&A session and are happy to take your questions. [Operator Instructions]
[Operator Instructions] The first question comes from the line of Richard Taylor with Morgan Stanley.
Richard Taylor here from Morgan Stanley. Just 2 for me, please. First of all, I'd like to ask about what the current situation means for your Coppertone plans, particularly for 2020. Are they delayed? And also for other M&A opportunities. I suppose most people would think that this environment is conducive for other M&A opportunities. So any color you can give on your pipeline or opportunities? And then secondly, I think you hinted back at the launch of the C.A.R.E.+ plan that you're a bit behind where you'd like to be on e-commerce. And I'm particularly thinking of La Prairie, which appears to be, in this quarter, impacted more than some of the competitor brands in terms of the like-for-like sales growth. So can I ask, is that because the digital offering on La Prairie is not where you'd like it to be versus peers? And how long do you think it will take to get to where you'd like it to be?
Thank you for the questions, Richard. On the 2 topics. First, Coppertone. Coppertone in sun in North America is obviously facing the same uncertainty as the other sun businesses as such. It's hard to predict what exactly will happen. The impact on Coppertone as a business is, first, as far as the integration of the plans are concerned, that goes -- continues unchanged. They are on track. We continue pushing them as we planned originally. Obviously, as far as we can execute part of these plans will depend a lot on what the possibilities will be in executing and activating during the sun season 2020. What the impact on M&A is, I think as far as M&A activities or plans are concerned, I refer to my almost standard statement. It remains a part of the strategy. We're obviously observing opportunities that might arise during this crisis or in the following month. It's hard to comment now on what actually might happen or not happen.On the C.A.R.E.+ plan that I would summarize that are certainly -- there's certainly further potential in e-commerce for La Prairie. And that is where we're working on as such. And that potential obviously is increasing due to the crisis as such. We are working very hard on that. And in the coming months, you will see a number of initiatives also coming online.
The next question comes from the line of Celine Pannuti with JPMorgan.
Two questions. So first, I wanted to understand a bit Western Europe better and especially NIVEA. So could you give us a bit of an idea of how NIVEA performed, how much down it was? And am I to understand that you saw a negative impact from lockdown, you didn't see any stocking? I mean was Germany good because of stocking you're saying, on that, actually, you think it was a negative? And on sun care, you just mentioned Coppertone. How big is sun care and how should we look at Q2 for NIVEA? And that should we basically write-off most of the sun care sales? So that's my first question.My second question is trying to understand the different building blocks on the margin. So is it possible to understand the mix negative impact, I mean, on H1 to start with because I don't know how much visibility you have for the year. But for H1, the negative mix impact from La Prairie, from sun care and then against that, the positive cost containment, and I presume as well, tesa as well will see some negative impact from operational deleveraging. So understanding all those moving parts and the net impact on H1.
Thank you for the question, Celine. On the first question on -- in NIVEA in Europe, the situation in Europe, as you know, has been very, very differentiated, I would say, both in the facing of the crisis and then the impact on the consumers and shoppers. We see that a part of Europe and many in Southern Europe had been impacted by real lockdown number, reduced distribution mainly. The other part of the impact comes, and that's a majority impact is also by the fact that a lot of the activation plans have been postponed. The activation, obviously, in-store has been focused on other categories. And that links to what you mentioned further is that the stockpiling on pure essentials is not very significant for us. It's more an impact of not being able to activate than it is an impact on the fact that we would -- that product categories would have been stockpiled as such as these categories of hygienic essentials is relatively limited in our business. Sun care is one of these areas that are very difficult to predict. Because a number of variables that will influence the sun season apart from the usual weather, obviously, is what actually is going to happen with tourism, both inland tourism in a number of countries as real travel tourism. We've seen that in Germany, for example, at the end of March, the sell-out with the great weather has been quite good. But that's obviously without traveling that followed that in April. So it's hard to predict. We're obviously looking and activating as much as we can the sun season. But really predicting on how this is going to impact Q2 and Q3 is, in my opinion, at this moment, impossible to forecast.
Celine, thank you for the second question as well on margin. Yes, we're seeing strong headwinds, no doubt, which are difficult to quantify precisely at that point. However, indeed, they're linked to mix, specifically from La Prairie, but also, which, by the way, as we have spelled out in the past, is highly accretive. And clearly, the reduction in H1 is going to have -- a reduction in sales will have a significant impact and a significant -- put pressure on our gross margin. Also, what we do see is more growth in the market in personal care categories compared to the skin care ones. And again, the personal care ones have relatively lower margins versus the average for the company. The second impact in H1, and that we expect specifically in Q2, is going to be deflationary putting price pressures. At the same time, I should say that we really are taking all the mitigating actions and measures possible at that point. We continue with our value engineering program, which is part of C.A.R.E.+ and this continues [ whole period ]. We continue with our optimization of the manufacturing footprint, delivering cost savings as well. We are literally leaving no stone unturned when it comes to also savings in personnel and nonpersonnel costs in order to be able to mitigate the impact on the gross margin from the external headwinds, which we currently have in the business. And we're very proud of what we delivered in terms of gross margin improvement. In 2019, 60 basis points. And again, we don't want to lose that. We will continue to work in 2020 to get it sized which we can this external headwinds we see at the moment.
The next question is from the line of Iain Simpson with Barclays.
A couple of questions from me, please. Firstly, I wondered if you could just talk us through what's happening in Brazil, clearly going very well for you at the moment, perhaps a bit better than some other companies are experiencing down there. So any color you can give on that market would be very helpful. Secondly, it's quite a few years with no real M&A from Beiersdorf. And you've now announced a number of transactions in the last year or so, most recent, this packaging thing. I mean I'm assuming it's quite small but it's still an investment. I wondered if you could just talk us through, in general terms, how your strategy has changed there. And why we're seeing a number of transactions after probably 10, 15 years with nothing?
Thank you. In Brazil, I think that we, over the time that the Brazilian crisis endured, we took a number of important decisions going forward. One of them is the real focus on where we can actually win and with an impact on the portfolio strategy. We set up a new organization in line with that strategy and that going forward. And also, we obviously took decisions on -- finished the extension of the Itatiba factory, which allowed us to increase not only capacity but also capabilities in implementing the plan as such. So that plan is being coming together very nicely in these circumstances. Therefore, we've been able to grow materially in Brazil over the last, I would say, 1.5 years now.As far as M&A activation is concerned, the strategy remains as we announced last year. We've clearly identified which are the strategic pillars and the future of Beiersdorf in digitalization, in innovation, in sustainability and our focus for M&A is exactly in this area. If you find possibilities to accelerate these pillars, then we would obviously act. Therefore, we've aligned our search fields in that direction and set up organizationally as well to be able to capture the opportunities that might arise, and finally, also took the decisions to go for it. And I think these 3 points are the ones that have led to the -- to where we are today, and will continue to guide us in the coming months.
The next question is from the line of Gian Marco with MainFirst.
Two questions from me, please. The first one is a follow-up also on the Latin American sales. I'm really positively surprised by the strong performance. And you also mentioned some background information already, but can you also give us some more light about what changed in the consumer behavior there, doing really such a -- or bringing really such a big difference now in the growth in Brazil. And the second question is just in relation to the strong fluctuation we see in the oil price currently. So can you also give us some more detail there about the potential negative impact of pricing-related growth in tesa, for example, and also probably on your margins for 2020?
I think, to your question on the Latin American sales, consumer behavior and shopping behavior has always been extraordinarily volatile in Latin America. It's an area, as we all know, this is not foreign to any kind of crisis. And also for Q1, particularly, we also have to realize that the coronavirus impact has been very limited until now in Latin America. We will see a lot more impact. We saw a bit at the end of quarter 1, but obviously that will come in Q2. In total, in Latin America, focusing I think what I said in Brazil is very radical for Brazil, but it's driving the same thing. I think the key areas of the focus where we want to win, the ability to also put the innovation, locally relevant innovation into the market with the investments we've took. And certainly also, the decision we took to focus on NIVEA and on what we can do in Derma, which is -- it's an important market in Latin America, Derma cosmetics. And the fact that we focus on that one. For example, we started now 1.5 years ago with our Eucerin business in Brazil, which has been driven by the innovation and by the approach that we've seen somewhere else have all contributed to the growth in Latin America.
And on the second question on the impact of the oil price, yes, indeed, the collapse of the oil price have clear deflationary pressures, both in consumer and especially on the tesa business. No doubt the price pressures are there and specifically on the Direct Industries business of tesa. At the same time, in tesa, we are taking exactly the same level of cost measures as we do in consumer, and we are looking at both input cost reductions, especially where this can be now negotiated and passed, and as well as personnel, nonpersonnel costs are being reduced. We have the same recruitment freeze, which Stefan earlier mentioned for both businesses. So there we are working as much as we can in order to minimize the impact on the price -- deflationary price pressures, which are very clear now.
The next question is from the line of John Ennis with Goldman Sachs.
My first is a follow-up on sun care. I wondered if you could comment on recent trading in April. And then just give us what proportion of your annual sun care sales usually fall into 2Q? And then my second was on La Prairie. Can you comment on the margin implications when you have store closures? Maybe you could give us sensitivity with respect to the fixed cost proportion of this business unit and then maybe some steer on the profitability level in 1Q. Could you confirm, for instance, that La Prairie was still profitable in the first quarter?
On the question regarding sun care as such, at this moment, in April, it's under last year. And for the main reasons I already quoted is activation. As such, even if the sun has been shining, activation on sun care is not at a normal level, preseason normal level as far as presence in-store is concerned and priority by consumers as such. So that is the situation in April going forward. On La Prairie, I hand over to Dessi.
Yes. So in terms of the margins linked to the La Prairie and door closures, pricing of La Prairie is very much aligned. So the margin -- the gross margin from the doors is very similar to the average gross margin of La Prairie all together. So in terms of gross margins for La Prairie, that is neither -- it doesn't change significantly the level of gross margin. In terms of the question that La Prairie is still profitable [ with regards to ] the reduction of sales, it is still a very profitable business in Q1.
The next question is from the line of Jeff Stent with Exane.
Just 1 question from me for Stefan. Stefan, when you came in, I remember that you said that a lot of us weren't familiar with you but when you make a promise, you deliver. And with respect to the 2023 targets, both top line and margin, can we assume that you intend to continue to deliver?
That's a simple question with a simple answer, yes, we aim to continue to deliver by 2023.
The next question comes from the line of David Hayes with Societe Generale.
Just 1 -- just on La Prairie and the monthly progression. Can you give us a feel for the [ fruit ] and how that develops [ retail ]? And I guess, specifically towards the end of March, what kind of recovery you're seeing in Asia, both in terms of travel retail and domestically?
Well, the development of La Prairie, we've seen that as the crisis peaked in China in January, February, we saw that as stores opened again, very good sellout from the stores that were opened in China. So that we see. We do not see at this moment or certainly not in the first quarter, a real development on the travel retail. To give you a little bit of flavor, depth of the crisis, over 90%, I think 93% of stores were closed. At the end of the quarter, we were, I think, at 86% or something. So it's -- albeit small, but an improvement and the sellout per store has been -- has been very good in mainland China.
Next question comes from the line of Chris Pitcher with Redburn.
Could you give us an update on where your innovation and development plans are for Coppertone? And whether the potential loss of a North American summer season impacts that development, whether this was still a year of sort of research and development rather than real execution? And then secondly, on NIVEA, can you give us a sense of how your production has adapted? Are you, like many companies, reducing the number of SKUs you're producing and perhaps getting some manufacturing efficiencies on the back of that?
As said before, the Coppertone plans continue to develop, the execution is obviously a question mark. It will depend a lot on what happens in the summer and now in how far we can execute, for example, new innovation, et cetera. So that is a question mark to be marked. So it's more a phasing issue as such. On supply chain, the focus has been to keep up the service level they're used to, and that largely is still the case. We have a network that allows us to have a good degree of flexibility. And obviously, with the investments over localization over the last 5 years has made us a lot more robust to anticipate these kind of changes. Obviously, there has been planning volatility in certain categories like soap, which is a relatively small category with big spikes that influence our service level. But that is, as I said, more from a planning point of view than from a capability point of view. As such, we continue to focus on efficiencies in the -- in production in assortment, but they had not to be up specifically during the crisis at this moment. Factories also worldwide are producing as far as local regulation does not stop doing so.
The next question is from the line of Charles Eden with UBS.
So you provide a useful statistic that I think 86% of La Prairie doors were closed at the end of the quarter. If we look at the tesa business, do you have a sense of the percentage of your customers in Direct Industries that are currently not producing at all due to lockdown?
I've not completely -- I'm sorry, I did not completely pick up the question, percent of Direct Industries not asking for products. These are related -- the tesa question here. Well, we do have the CEO of tesa also on the call, Norman Goldberg, is here with us in this virtual room. Norman, you have a brief answer to this one?
Yes. Good morning, everybody. Norman Goldberg here. You asked about the Direct Industries at the moment not producing. Direct Industry is mainly impacted in the automotive area, the automotive industry, where we have shutdowns in North America. You've seen the -- a news about shutdowns also in Europe. We expect those shutdowns in the automotive industry to continue for roughly -- altogether, 4 to 6 weeks. The overall automotive, let's say, share of tesa is only about less than 1/3. So you can imagine that this is, of course, a certain impact. But as I said, with some of the plants opening in the next few weeks already, we expect sales also to continue there. Thank you.
I don't see any other callers.
At this time, there are no further questions. I would like to hand back to Mr. Jens Geißler for closing comments.
Okay. Well, thank you for having joined our conference call. Beiersdorf next Investor Relations event will be the publication at our half year results on the 6th of August. We appreciate your interest in Beiersdorf. Thank you, and goodbye.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.