L'Oreal Branches Out, Targets One Billion New Customers In 10 Years
This article was originally published in The Rose Sheet
Executive Summary
Focusing on "accessible innovation," L'Oreal SA plans to increase its share in emerging markets and add one billion to its consumer base, according to CEO Jean-Paul Agon
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Focusing on "accessible innovation," L'Oreal SA plans to increase its share in emerging markets and add one billion to its consumer base, according to CEO Jean-Paul Agon. "Our aim is to seek out, win over and secure the loyalty of one billion new consumers in these [developing] countries within the next 10 years - and so double the number of women and men to use our brands and our products around the world," he said during the firm's Feb. 16 annual earnings call. L'Oreal's diversified brand portfolio and focus on research and development will help it reach that lofty goal, marking "a new face in L'Oreal's great adventure," Agon suggested. Products down the line will be innovative and accessible, positioned to "optimize value" for every consumer. L'Oreal also plans to broaden its appeal by extending into new categories. Such moves signify a strategic shift for the French cosmetics firm, which has grown for decades by targeting consumers primarily in Western Europe and North America. But the emergence of new markets "opens up fantastic and new opportunities for us to grow through extensive penetration of a very large number of potential customers," Agon observed. Despite sales declines of 6.3 percent and 3.4 percent in Western Europe and North America, respectively, L'Oreal derived two-thirds of its overall sales from those regions in fiscal 2009. The firm's net profits dropped 8 percent to roughly €1.79 billion, or $2.4 billion for 2009, with net sales essentially flat at €17.5 billion, or $23.8 billion. Profit declines were attributed to a challenging consumer market and restructuring costs. Sales in L'Oreal's consumer products segment were up 3.2 percent to €8.5 billion, or $11.6 billion. New product innovations at all price points and the global "dynamism" of its Garnier and Maybelline brands helped propel the segment, according to consumer products president Jean-Jacques Lebel. L'Oreal's luxury products segment was not as successful, with worldwide sales down 9 percent to about €4.1 billion, or $5.6 billion. Yves Saint Laurent Beaute was a bright spot for the luxury segment, with sales up 50 percent in the U.S., 30 percent in France and 24 percent in the U.K. driven by the launch success of fragrances La Nuit de l'Homme and Parisienne , as well as Mascara Singulier and foundation Teint Resist. Lancome increased its market share in the U.S., Japan and China on skin-care innovations Genifique and Absolue Precious Cells , "making the brand successful in the strategically important anti-aging segment," division president Marc Menesguen said. The exec is confident that sales in the luxury segment will turn around in 2010, led by forthcoming launches including Lancome Renergie Volumetry, an anti-wrinkle product, Hypnose Precious Cells , a lash-regenerating mascara, and new fragrance Tresor in Love . YSL will re-launch its Opium fragrance and introduce Mascara Effet Faux Clis Noir Radical, while Armani will roll out makeup items Rouge d'Armani and Eyes to Kill Mascara. On the professional products front, L'Oreal saw sales decline 3.3 percent to roughly €2.4 billion, or $3.3 billion, due to an overall downturn in the salon market, but its market share increased almost 1 percent to 27.3 percent worldwide. L'Oreal attained record market share in professional products in North America - 36.1 percent - thanks largely to strong performances from its Matrix , Redken and Pureology brands. L'Oreal's active cosmetics division - made up of its Vichy , LaRoche-Posay and SkinCeuticals brands, among others - recorded a 1.5 percent sales decrease to €1.2 billion, or $1.7 billion, but commanded industry-leading global market share of nearly 20 percent for the year, according to General Manager Brigitte Liberman. Sales at The Body Shop were up slightly (0.7 percent) to €726 million, or $988 million, while sales in L'Oreal's dermatology branch - Galderma , a joint venture with Nestle - grew 10.8 percent in 2009 to €489 million, or $665 million. - Lauren Nardella ( 1 [email protected] ) |