07.30.07
2. L’Oréal
France
www.loreal.com
Sales: $19.8 billion
Sales:
$19.8 billion. Net income: $2.3 billion.Key Personnel:
Jean-Paul Agon, chief executive officer; Jean-Jacques Lebel, president, professional products; Marc Menesguen, president, luxury products; Patrick Rabain, president, consumer products; Béatrice Dautresme, executive vice president, corporate communications and external affairs; Jean-Françcois Grollier, executive vice president, research and development; Marcel Lafforgue, executive vice president, production and technology; Christian Mulliez, executive vice president, administration and finance; Geoff Skingsley, executive vice president, human resources.Major Products:
Hair care, skin care, sun care, color cosmetics, toiletries and fragrances marketed under such brand names as L’Oréal Professionnel, Kérastase, Redken, Matrix, L’Oréal Paris, Garnier, Maybelline New York, Softsheen-Carson, Lancôme, Biotherm, Helena Rubinstein, Giorgio Armani, Lauren, Cacharel, Kiehl’s, Shu Uemura, Vichy, La Roche-Posay, The Body Shop.New Products:
Pureology (acquisition); Kéraskin Esthetics; U.S.-Anthelios SX sun care, High Intensity Pigments (HIP) lipcolor, Bare Naturale Mineral Makeup, Maybelline New York Superstay Lipcolor; Nutrioniste Skin Care, Casting Créme Gloss; Emerging Markets—Garnier Even (South Africa); Asia—Yue Sai Recharge (China).
Comments:
L’Oréal had another great year in 2006, but the recent acquisitions of Pureology, Irvine, CA, underscores the company’s commitment to long-term growth. Sales rose 8.7% last year and net earnings increased 11.9%. By segment, cosmetics sales rose 5.6% to over $18.8 billion. Sales at The Body Shop rose 9.7% to $546 million and dermatology sales increased more than 8% to $432 million.Within the cosmetics segment, professional product sales increased 3.2% to nearly $2.7 billion. Sales in Western Europe rose 2.1%, but North American sales were held back by turmoil in the retail sector. In the Rest of World zone, growth accelerated, especially in Russia (+42%), Latin America (+17%), China (+23%), Japan (+6.4%) and India (+46%).
Consumer product sales rose 5.4% to more than $9.9 billion. Garnier broke the 2 billion euro mark, as sales reached $500 million in the U.S. L’Oréal called it an excellent launch pad for conquering the U.S. skin care market. Sales of Maybelline New York cosmetics rose 5%, driven by gains in New York, Latin America and the UK.
Luxury product sales rose 5.3% to more than $4.7 billion. The company said the launch of Absolue Premium Bx, an anti-aging skin care line, and gains in perfume sales, helped growth. L’Oréal calls Lancôme the No. 1 luxury cosmetics brand in the world and was pleased to report a return to growth in Europe. Meanwhile, Hypnôse became one of the top 10 women’s fragrances in the world.
Sales of active cosmetics soared 14.4% to $1.4 billion, as consumers around the world embrace the link between beauty and dermatology. To capitalize on the trend, L’Oréal acquired Sanoflore, a French company that markets natural, certified organic cosmetics. Also in 2006, Vichy, the No. 1 dermocosmetic brand in Europe, Asia and Latin America, was launched in the U.S.
As previously noted, sales of The Body Shop jumped nearly 10% last year, with particularly strong results in Europe and Asia. The successful launch of an aloe vera skin care range and Neroli Jasmin fragrance provided a boost as well.
By business segment, skin care sales rose nearly 12% to $4.8 billion, hair care sales increased 3.7% to $4.5 billion, makeup sales rose 3.5% to $3.9 billion, hair colorant sales rose 3.1% to $3 billion, perfume sales increased 6.9% to more than $1.9 billion and sales of “other” products declined 4.6% to more than $500 million.
By region, Western Europe sales increased 3.7% to nearly $8.8 billion. North American sales increased 2.2% to $4.9 billion and Rest of World (ROW) sales surged 12.8% to $5.1 billion. Within the ROW, sales in Asia increased 7.4%, but Latin American sales jumped 18.6% and sales in Eastern Europe soared nearly 25% to more than $1 billion.
Sales in Western Europe got a boost from good results in Germany, where Redken continued to shine; the UK, where L’Oréal Paris Beauty Bars took the country by storm and Spain, where Kiehl’s made its debut.
The European concept of well-being has taken root in the U.S., and L’Oréal’s Vichy brand was on top of the trend with the opening of Dermo Skincare Centers.
Emerging market sales got a boost when the Chinese cosmetics brand Yue-Sai was repositioned. And India got its first exposure to The Body Shop with seven store openings in 2006. L’Oréal expects to open 60 stores during the next five years. Biotherm posted a 70% sales gain in Russia last year and L’Oreal Paris and Garnier both reported good gains in Romania.
Still Growing in 2007
As already noted, L’Oréal acquired Pureology in May and put it in its professional products division alongside brands such as Matrix, Redken and Mizani. Pureology had sales of $57 million in the 12 months prior to L’Oréal’s acqusitiion.
In June, Kéraskin Esthetics debuted. Billed as the first professional skin treatment brand targeted at hair salons, the company called it an historic step for the professional division. And just last month, L’Oréal USA acquired Maly’s West in a move to bolster its salon products distribution strategy in the U.S. The acquisition of Maly’s West, which will operate within the professional products division, follows the April purchase of Beauty Alliance. Both acquisitions help create a high-performance salon distribution model, according to the company.
All these moves during the past year have helped L’Oréal’s sales jump 9.4% for the first six month of 2007.
“After the good start to the year, the group continued to record very high sales growth in the second quarter with an increase of 10.4%,” said Jean-Paul Agon, chief executive officer, L’Oréal. “This strong momentum reflects both very rapid growth in new markets as L'Oréal captures strategic positions, and sustained growth in Western Europe and North America. All our divisions are enjoying strong growth rates.”