Clarisonic Energizes L’Oreal Luxe Sales As Firm Eyes Global Rollout
This article was originally published in The Rose Sheet
Executive Summary
“A kind of miracle,” according to L’Oreal CEO Jean-Paul Agon, Clarisonic grew 61% in the firm’s third quarter, and the brand’s “globalization” is still to come. Lancome also helped to boost sales in the firm’s Luxe division 6.6%, on a like-for-like basis, to roughly €1.4 billion ($1.79 billion) for the quarter.
L’Oreal S.A.’s third-quarter sales grew 4.7% on a like-for-like basis, or 11.7% reported, to roughly €5.14 billion ($6.56 billion), led by the firm’s Luxe division and a strong performance in North America, with Clarisonic driving gains and poised for global expansion.
According to company leadership, Clarisonic sales were up 61% in the quarter, leading Chairman and CEO Jean-Paul Agon to call the brand “a kind of miracle.”
L’Oreal announced its acquisition of Clarisonic skin-cleansing devices in November 2011 with the purchase of Redmond, Wash.-based Bioscience Laboratories Inc. (Also see "L’Oreal USA Plugs Into Device Category With PBL/Clarisonic Acquisition" - HBW Insight, 14 Nov, 2011.).
Clarisonic Sonic Skin Cleansing Systems, which range in price from $119 to $199, “use a patented sonic frequency of more than 300 movements per second to gently, yet thoroughly remove six times more makeup and two times more dirt and oil than cleansing with your hands alone,” according to Clarisonic.com.
“The brand is doing very, very well in U.S. distribution,” Agon said.
L’Oreal’s North American sales increased 7.1% to approximately €1.35 billion ($1.72 billion) for the quarter, based on a comparable structure and identical foreign exchange rates.
Clarisonic systems will roll out on a limited basis in France this year, but “the real globalization will happen next year,” which “should mean that the growth will continue at the [same] high rhythm,” according to the exec.
The brand is helping to propel growth in L’Oreal Luxe division, which booked sales of approximately €1.4 billion ($1.79 billion) for the quarter, an increase of 6.6%, like-for-like, despite a market slowdown in Asia and the travel-retail sector.
Lancome also contributed to Luxe gains. The firm identified newly launched fragrance La Vie est Belle as a key performer for the quarter, after naming it among “major” launches likely to drive second-half growth for the firm in an August earnings call (Also see "L'Oreal Banking On “Major” Product Launches In 2012 Second Half" - HBW Insight, 3 Sep, 2012.).
Described as “the first-ever iris gourmand,” La Vie est Belle – which translates to “Life is Beautiful” – combines “the elegance of iris with the strength of Patchouli and the sweetness of a gourmand blend,” according to the company. Backed by ads featuring actress Julia Roberts, the scent retails online in 1-oz., 1.7-oz. and 2.5-oz. sizes for $55, $75 and $95, respectively.
Karen Grant, VP and global beauty analyst for the NPD Group, which tracks prestige fragrance sales in department stores, said in an Oct. 24 interview that La Vie est Belle “has been a bit of a surprise in the sense that we haven’t seen a cosmetic counter brand come in so strong in the ranking” where designer fragrances have been dominating.
L’Oreal expects Manifesto, a fragrance launching from its Yves Saint Laurent unit, to have a favorable impact on its Q4 performance, based on early sales results in France.
Kiehl’s and Viktor & Rolf are also helping L’Oreal to capture market share and grow its Luxe business, according to the firm’s Nov. 6 release.
Meanwhile, it continues “making strong progress in anti-aging skin care” with Lancome offerings including Visionnaire Advanced Skin Corrector ($87 for 1 oz.); Absolue L’Extrait Regenerating Ultimate Elixir ($350 for 1.7 oz.), featuring Lancome Rose Native Cells “to enhance skin’s regenerative potential”; and Genifique Yeux Light-Pearl Eye-Illuminating Youth Activating Concentrate ($68 for 0.67 oz.).
Garnier “Comeback” Adds To Growth
Momentum behind L’Oreal Paris, Garnier and Maybelline resulted in 4.8% like-for-like growth in L’Oreal’s Consumer Products division, which recorded sales of €2.65 billion ($3.38 billion) for the quarter, reflecting market-share gains in Western Europe and North America, the firm says.
Agon attributed Garnier’s “comeback” in recent quarters to product innovations including the Skin Renew Miracle Skin Perfector, Garnier’s entry in the BB cream category, and its Skin Renew Clinical Dark Spot Corrector, which has been a No. 1 SKU among skin-care offerings in Walmart stores “for many months,” according to the chief exec. Both products are seeing enthusiastic uptake in Western Europe, he noted.
Furthermore, Garnier has begun rolling out “what’s going to be their big, big event,” Agon said. The product, called Olia, is “the first oil-powered permanent home hair colorant.” Formulated with the brand’s ODS 2 technology, the product contains natural flower oils and no ammonia.
L’Oreal’s Active Cosmetics business advanced 5.6% on a like-for-like basis to €345.4 million ($441 million) for the quarter, with accelerating sales in North America, the firm says.
Growth in the division was spurred by La Roche Posay’s worldwide performance and the “recovery” of Vichy, which has benefited from a new advertising campaign and the successful launch of Idealia Smoothing & Illuminating Cream featuring kombucha, a fermented tea ingredient boasting detoxifying and anti-aging properties.
L’Oreal’s Professional Products unit reported roughly flat growth, with sales of €737.5 million ($941.6).
In New Markets, the firm’s sales rose 8.1% to €2.03 billion ($2.59 billion) on the strength of its business in Latin America, which jumped 11.4% for the quarter, while Asia-Pacific, Eastern Europe and Africa, Middle East regions also experienced increases – up 7.3%, 5.4% and 9.6%, respectively.
Sales in Western Europe were down 0.6%, like-for-like, to €1.76 billion ($2.25 billion), reflecting “good performances in several major countries, and the difficult situations in the southern countries,” L’Oreal says.
Overall, L’Oreal “is outperforming its market, thanks to the quality and diversity of its brand portfolio, and its innovation power,” the firm states.