10.25.12
2. L’Oréal
Clichy, France
www.loreal.com
Beauty Sales: $26.3 billion
Key Personnel: Jean-Paul Agon, chairman and chief executive officer; Sir Lindsay Owen Jones, honorary chairman director, Laurent Attal, executive vice president, research and innovation; Jean-Jacques Lebel, president, L’Oréal Consumer Products Division Worldwide; Brigitte Liberman, worldwide president, L’Oréal Active Cosmetics Division; Alexandre Popoff, managing director, Latin America Zone; Frederic Rozé, managing director, North America Zone; Geoff Skingsley, managing director, Africa, Middle East Zone; An Verhulst-Santos, general manager, L’Oréal Professional Products Division; Jochen Zaumseil, managing director, Asia Pacific Zone.
Major Products: Hair care, skincare, sun care, color cosmetics, toiletries and fragrances sold under many brand names in consumer, luxury and active channels, marketed under brands including Essie, Garnier, L’Oréal Paris, Maybelline, SoftSheen-Carson, L’Oréal Professional, Kerastase, Redken, Matrix, Mizano, Shu Uemura Art of Hair, Lancôme, Biotherm, Helena Rubenstein, Kiehl’s, Shu Uemura, Giorgio Armani, Ralph Lauren, Cacharel, Viktor & Rolf, Diesel, YSL Beauté, Vichy, LaRoche-Posay, Innerve, SkinCeuticals, Sanoflore, Stella McCartney. L’Oréal also owns The Body Shop.
New Products: Ralph Lauren Big Pony for Women, Maybelline Falsies Flared and Colossal Cat Eyes mascaras, Kiehl’s Rosa Arctica Lightweight Cream, Garnier’s BB cream, Miracle Skin Perfector, and Dark Spot Corrector; L’Oréal Paris Elvive Triple Resist, Mythic Oil from L’Oréal Professionnel, Lancôme Visionnaire, Hypnôse Doll Eyes, Giorgio Armani Régénessence skincare, Loverdose by Diesel, La Roche Posay Tolériane Ultra, The Body Shop Chocomania Beautifying Lotion.
Comments: Thanks to an expansive global market and increased sales in all categories, L’Oréal enjoyed a profitable year. Net sales rose to more than $26 billion, up over 5% like for like. Commenting on the annual results, Jean-Paul Agon, chairman and chief executive officer, said: “2011 was a solid year of development, which has made the group even stronger.” He added: “L’Oréal achieved sustained sales growth and confirmed its position as the world leader in beauty.”
What’s more, he said, it was a good indicator of the future.
Agon said all divisions are expanding—and as in the growing case with prestige product sales—L’Oréal Luxury posted a particularly prosperous year, due to Lancôme, Giorgio Armani and Kiehl’s. New Markets such as Asia and Latin America are leading the way, but North America, too, showed progress. Agon said that 2012 will be a telling year, “as the New Markets are set to become the group’s number one geographic zone.”
Cosmetics accounted for the lion’s share of total sales—$24.4 billion—boosted by almost $1 million in sales from both The Body Shop ($994 million, up 4.4% like-for-like) and L’Oréal’s Dermatology brands ($912 million, an increase of 8.4% like-for-like).By operational division, Consumer Products led with $12.7 billion (up 4% like for like), followed by L’Oréal Luxury with $6.2 billion (an 8.2% rise like for like), Professional Products reached $3.6 billion (up 2.5%) and Active Cosmetics $1.8 billion (a rise of 3.2%).
By geographic zone, Western European sales, at $9.4 billion, led slightly over New Markets at $9.3 billion, North America followed with $5.7 billion. Of the New Markets, Asia Pacific topped the list at $4.7 billion (up double digits to 13% like-for-like), followed by Latin America at $2.2 billion (also up double digits to 13.2%). Africa and Middle East also increased double digits (10.5% like-for-like), landing at $752 million. Eastern Europe was the only region to mark a decrease, dropping almost 3% like-for-like, to come in third at $1.7 billion.
Professional Products were boosted by hair care and color, which helped to win market share in all zones. The introduction of hair oils—such as Mythic Oil from L’Oréal Professionnel, Elixir Ultime from Kérastase and Argan-6 oil by Redken—added to growth.
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Big Pony for Women performed well for L’Oréal in the fragrance race. |
In Western Europe, the division is winning market share in France, Germany and the Nordic countries. In North America, things are looking up thanks to hair care, makeup and skincare. In the New Markets, the division is performing well in all zones, except Eastern Europe. In Asia, the division is continuing to grow strongly, particularly in facial skincare for both women and men. In Latin America, the division had a good year, particularly in Mexico, Argentina and Chile, due to deodorants and hair color.
As discussed previously, premium products carried the weight at many companies in 2011. L’Oréal Luxury illustrates the trend, with 2011 sales up by 8.2% like-for-like. The division launched innovations in all regions, with Visionnaire from Lancôme leading the way.
In Western Europe, L’Oréal Luxury did well, especially in France, due to Lancôme, Kiehl’s and Diesel. In North America, the division recorded strong growth with its brands Lancôme, Yves Saint Laurent, Kiehl’s, Giorgio Armani and Viktor & Rolf.
In the New Markets, L’Oréal Luxury is growing rapidly. Market share is expanding in Asia due to Lancôme, Kiehl’s and Shu Uemura; and it continues to grow in Latin America, the Middle East and Eastern Europe. The cosmetics brand Clarisonic, joined the L’Oréal Luxury brand portfolio; it is the market leader in sonic technology skincare applications.
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Kiehl’s contributed to L’Oréal’s market expansion in Asia. |
La Roche Posay is growing globally, and Vichy has maintained its No. 1 position in the world.
Conditions improved in 2011 for The Body Shop, which achieved 4.2% sales growth like-for-like, with a large rise in the 4th quarter. In 2011, The Body Shop achieved growth in Europe and North America and quickly expanded in the New Markets. The brand experienced strong growth in the Middle East, particularly in Saudi Arabia and Egypt, as well as in Asian countries such as India, and in Hong Kong and Eastern Europe. The retailer now has 16 online stores and is continuing to grow at an accelerated rate in e-commerce. At the end of 2011, The Body Shop had a total of 2,748 stores, an addition of 143 since December 31, 2010, with an additional presence in global Travel Retail outlets.
A few additional notes on activities during the year:
In March, with Designers Brand fragrances gaining within the L’Oréal Luxe Division, Stephan Bezy was appointed international general manager of Yves Saint Laurent and joined the management committee of L’Oreal Luxe.
Ralph Lauren expanded one of its headliners, adding the four-fragrance Big Pony Collection for Women.
L’Oréal renewed its commitment to hair care by opening a new Global Hair Research Center, located in Paris Saint-Ouen. The cutting edge facility is the head of a network of six regional centers around the world. The 25,000-square meter center employs 500 chemists, physico-chemists, opticians, materials scientists, metrologists, rheologists, computer scientists and statisticians
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In August L’Oréal reported first-half sales of $14.55 billion, a 10.5% gain. Net profits rose 10.8%, and the world’s largest beauty company confirmed expectations that it will outperform the market this year.
However, despite the optimism, shares dropped and one investment firm downgraded the French beauty giant. At the end of August, Agon acknowledged: “We believe that the cosmetics market should remain buoyant, even though over the summer we noted some obvious signs of slowdown.”
Agon noted a slight falling off in the luxury market in Asia and the U.S., as well as in the travel-retail channel. Despite that, he said L’Oréal believes the worldwide cosmetics market should grow by about 4% over the year.
