Sales: $31.7 billion.
Key Personnel: Jean-Paul Agon, chairman and chief executive officer; Laurent Attal, executive vice president, research and innovation; Christophe Babule, executive vice president, chief financial officer; Cyril Chapuy, president, L’Oréal Luxe; Vianney Derville, executive vice president, Western Europe Zone; Lucia Dumas Bezian, executive vice president, communications and public affairs; Nicolas Hieronimus, deputy chief executive officer, in charge of divisions; Barbara Lavernos, executive vice president, chief technology and operations officer; Jean-Claude Le Grand, executive vice president, human relations; Brigitte Liberman, president, active cosmetics division; Alexis Perakis-Valat, president, consumer products division; Alexandre Popoff, executive vice president, Eastern Europe and Africa, Middle East; Stéphane Rinderknech, president, L’Oréal China; Lubomira Rochet, executive vice president, chief digital officer; Nathalie Roos, president, professional products; Frédéric Rozé, executive vice president, Americas Zone; Jochen Zaumseil, executive vice president, Asia, Pacific.
Major Products: Hair care, skin care, sun care, color cosmetics, toiletries and fragrances sold under many brand names in different channels. Consumer—Garnier, L’Oréal Paris, Le Club des Créateurs, Maybelline, SoftSheen-Carson. Professional—L’Oréal Professional, Kerastase, Redken, Matrix, Mizano, Shu Uemura Art of Hair, Keraskin Esthetics. Luxury—Lancôme, Biotherm, Helena Rubenstein, Kiehl’s, Shu Uemura, Giorgio Armani, Ralph Lauren, Cacharel, Viktor & Rolf, Diesel, YSL Beauté. Active Cosmetics—Vichy, LaRoche-Posay, Innerve, SkinCeuticals, Sanoflore.
New Products: Professional—Matrix SoColor Cult, Elseve Dream Lengths and Fructis Hair Food; Active Cosmetics—Hyalu B5; Kerastase Blonde Absolu, Laque Extreme.
Comments: It’s a beautiful thing at L’Oréal, the world’s largest beauty company, which posted its best year of growth since 2007, as sales increased 3.5% and like-for-like sales increased 7.1%. Gains were reported in all divisions, led by double-digit increases by L’Oréal Luxe and Active Cosmetics. Here’s a closer look at each division’s results.
Active Cosmetics’ sales increased 9.2% to nearly $2.7 billion, helped by big gains in North America and Asia. All three major brands contributed to the division’s growth. La Roche-Posay ended the year with double-digit growth, driven by its anti-wrinkle innovation Hyalu B5, and core franchises Anthelios and Effaclar, and is performing well across all zones. Growth at Vichy was again bolstered by the success of Minéral 89, the star product of 2018. SkinCeuticals’ sales rose in all regions; particularly in the US, where it remains the No. 1 professional skin care brand, according to L’Oréal. CeraVe, which posted double-digit growth in North America, is available in more than 30 countries.
L’Oréal Luxe sales increased 10.6% to $3.1 billion; Lancôme sales topped €3 billion for the first time. Skin care sales were driven by Génifique, Absolue and La Vie est Belle. The company noted that YSL Laurent and Giorgio Armani had a very good year in fragrances, thanks to the success of Black Opium, Y, Sì Passione and Acqua di Giò Absolu. Furthermore, the division is adding market share in Asia Pacific, particularly in China where growth is double-digit. Luxe performed well in dynamic markets in Travel Retail, Eastern Europe and Latin America, too.
Consumer products sales fell 0.7% to $14.2 billion; but L’Oréal Paris and Maybelline New York results were strong. Skin care sales rose more than 10%, thanks to demand for Revitalift Filler by L’Oréal Paris, Garnier tissue masks and Men Expert skin care. Maybelline New York drove makeup sales.
Professional products sales fell 2.6% to $3.8 billion. Still, the company maintains that all geographic zones are growing, except Western Europe. Hair care sales benefitted from demand for Kérastase, the popularity of Shades EQ by Redken and the launch of SoColor Cult by Matrix.
By region, sales rose 10.3% to $13.7 billion in New Markets (including Asia-Pacific, Latin America, Eastern Europe and Africa, Middle East). Asia-Pacific led the way with a 20% increase. L’Oréal noted that Singles’ Day sales in China, November 11, helped propel sales. Latin American sales fell 8.6%, as gains in Luxe and Active Cosmetics, couldn’t overcome poor economic conditions in Argentina and elsewhere. Eastern Europe sales rose less than 1%, helped along by gains in Active Cosmetics, as well dynamic growth in Turkey, Ukraine, Romania and Czech Republic. Sales in Africa, Middle East were up just 0.2%, which L’Oréal blamed on geopolitical tension and sluggish markets, especially in the Middle East.
Western Europe sales fell 0.7% to $9.5 billion due to malaise in France and the UK and a slowdown in makeup. The good news is that L’Oréal Luxe and Active Cosmetics outperformed its competitors in the region.
North America sales fell 1.6% to $8.5 billion, primarily due to forex effects. L’Oréal Paris, Maybelline New York and Essie helped to boost makeup and hair color sales. The acquisition of Pulp Riot lifted Professional Product sales; and Active Cosmetics sales jumped nearly 20% as CeraVe, SkinCeuticals, La Roche-Posay and Vichy all recorded double-digit gains.
In December, L’Oréal launched Business Opportunities for L’Oréal Development (BOLD), a corporate venture capital fund that takes minority stakes in innovative startups with high growth potential. The fund invests in new business models in marketing, research and innovation, digital, retail, communication, supply chain and packaging.
Two key personnel changes were announced late last year. Christophe Babule was appointed executive vice president, chief financial officer, and Cyril Chapuy was appointed president of L’Oréal Luxe.
In other news, last year, Covalence EthicalQuote ranked L’Oréal No. 1 worldwide across all industries in its reputation index. This ranking of the world’s largest listed companies reflects stakeholder and media perceptions, and companies’ communication on environmental, social, governance and human rights issues. Earlier this year, L’Oréal was recognized for the third year in a row as a global leader in corporate sustainability by non-profit organization CDP, with three “A” scores for the management of climate change, water security and forests.
For the first quarter of 2019, sales rose 11.4% to more than $8.4 billion, thanks to gains in L’Oréal Luxe and Active Cosmetics; and strong growth in new markets. E-commerce sales jumped nearly 44% and travel retail was up 24%.
According to CEO Jean-Paul Agon, the powerful underlying growth drivers remain the same as in 2018: Luxe and Active Cosmetics, skin care, Asia, e-commerce and Travel Retail.
“L’Oréal Luxe has performed remarkably well in a particularly buoyant market, led by its four major brands, Lancôme, Yves Saint Laurent, Giorgio Armani and Kiehl’s, all of which posted more than 15% growth, and by very strong development in Asia,” said Agon. “The active cosmetics division is exceptionally dynamic, growing in every region of the world, and growth in the consumer products division is gradually improving. The professional products division is making headway in a market that remains challenging.”
By division, active cosmetic sales rose 14%, L’Oréal Luxe sales rose 19%, consumer product sales increased 7% and professional product sales rose 4.8%. By region, Western Europe sales increased 2.1%, North America sales rose 9.2% and new markets’ sales jumped 30%.
Finally, last month L’Oréal confirmed it has entered into exclusive negotiation with the Clarins Group to acquire the Mugler and Azzaro brands.
“The perfume category is at the heart of our global strategy for growth at L’Oréal Luxe,” explained Cyril Chapuy, president L’Oréal Luxe. “In this context, we would be thrilled to welcome Mugler and Azzaro: these signatures, with a long history in fashion and olfaction, would perfectly complete our portfolio of brands.”
The deal is expected to be completed later this year.