Channel News Asia  Aug 9  Comment 
Maybelline parent L'Oreal is pairing up with Facebook to roll out virtual tests for shoppers to see how they might look with different lipsticks or eye shadows, adding to its push to drive more sales online and through social media networks.
Reuters  Aug 1  Comment 
Cosmetics group L'Oreal said on Wednesday it had bought Germany's Logocos Naturkosmetik, a manufacturer of vegan beauty products increasingly in vogue with the French group's customers.
Reuters  Jul 27  Comment 
L'Oreal shares fell on Friday as the cosmetics firm struggled to fire up sales of its mass market beauty products like Garnier shampoo and revenues in western Europe faltered.
Channel News Asia  Jun 22  Comment 
PARIS: French supermarket chain Casino and cosmetics group L'Oreal are launching new beauty stores in Paris this weekend, the latest effort by brick and mortar retailers to retain customers in the face of online competition. The two companies...
The Hindu Business Line  Jun 20  Comment 
French beauty major L’Oréal on Wednesday said that it has appointed Amit Jain as its new India Managing Director, effective August 1 making him the fi
Channel News Asia  Jun 12  Comment 
L'Oreal , maker of brands like Lancome and Maybelline, said on Tuesday it would seek to appeal a British court ruling favoring a U.S. start-up that accuses the French cosmetics giant of infringing its patent on a haircare product.


L'Oreal is the world's largest cosmetics producer by revenue -- €17.5B($24.7 billion)*-- and a North American market share of 15.8%.[1] L'Oreal offers products in hair care, skincare, make-up, deodorants, and perfumes through its 27 brands that span all income levels. In 2008 L'Oreal acquired Yves Saint Laurent Beauté, further increasing its cache in the luxury goods market. Its two largest competitors are Revlon (REV) and Procter & Gamble Company (PG).

Emerging markets are key growth drivers, comprising 33% of sales. The company expects this to rise to over 50% in ten years time. [2]. In addition China may become its third largest market by year's end. [3]. Two more markets that it has penetrated include men, who have shown an increasing amount of attention to cosmetics, and an older population that has an interest in anti-aging products.

  • All financial figures based on an exchange rate of €1 = $1.42

Business Overview


Year Revenue (€ millions) Revenue ($millions) Operating Income (€ millions) Operating Income ($millions)
200413,641 18,561 2,089 2,843
200514,533 19,775 2,266 3,083
200615,790 21,485 2,541 3,458
200717,063 23,218 2,827 3,847

Sales in North America increased 2.3%, declined 4.6% in Western Europe, and increased 6% in the rest of the world year over year. Sales in all divisions except consumer products decreased. Consumer product sales increased 1.5% to €8.5 billion. Active Cosmetics reported the steepest decrease in sales of 4.3% from 2008. [5]

Western Europe experienced -6.3% like for like growth as a result of poor performance in Spain and in retail travel. North America reported -3.4% like for like growth due to tough economic conditions. The professional products division did have a good year in gaining market share in the region. The Rest of World regional segment experienced strong growth with double digit growth in China, South Korea, Argentina, Chile, India, and South Africa. brands[6]

Of all L'Oreal's divisions, consumer products had the biggest sales increase of 3.2%. This was due to larger invoices in skin care and in particular by the Garnier and Maybelline brands. Luxury products was the worst performing division with -9.0% like for like growth. The weakness of the perfume market and the economic conditions in Western European market in which the division's brands are leaders affected performance. The Body Shops ended the year with 0.7% like for like growth with retail sales growing by 1%. Comparable store sales were down 0.6%. [7]

Q1 2010 Results (ended March 31, 2010)

L'Oreal reported sales of €4.72 billion, an increase of 8% year over year. It experienced sustained growth in consumer products segment with 6.9% year over year growth. Luxury products and professional products rebounded with 10.3% and 8.7% growth respectively. Geographically all regions experienced growth with new markets regions very strong at 18.7%. [8]

Business Segments

L'Oreal sells products to both professional stylists and non-professionals. Its outlets range from drugstores to department stores to its own boutiques. The France-based company has worldwide presence, with 68% of 2009 sales coming from the North America and Western Europe.[9] L'Oreal has responded to the recession that began in 2008 through marketing its products more aggresively and introducing new ones that will compel consumers to buy. In addition, its international presence has increased as generation of new wealth in areas such as Asia have increased citizens' spending power and thus their consumption of cosmetics.

L'Oreal operates the following business divisions:

Consumer Products (54% of 2009 Operating Income)

The consumer products segment sells its goods through mass-market drugstores. It achieved annual growth of 3.2% like for like.

  • Garnier- a skin and haircare brand. Garnier products are marketed to both men and women, and one of its most popular lines is Garnier Fructis haircare.
  • L'Oreal Paris- a leading international beauty brand. L'Oreal Paris offers products for men and women that spans all facets of personal care, from skin care, hair care and hair coloring to make-up and styling products. The division's products are marketed under names such as: Studio-Line, Dermo-Expertise and Elsève.
  • Maybelline New York- the world's number 1 cosmetics brand, Maybelline New York offers more than 200 products in over 90 countries. It contributes Maybelline focuses on bringing quality beauty products to women at an accessible price point. The brand introduced the first modern mascara to the American market in 1917.
  • Softsheen-Carson- leading brand in hair-care products for people of African descent. Formed through the merger of the Softsheen and Carson companies with L'Oreal in 2000, the division's most popular product is its no-lye relaxer, named Dark and Lovely.

Professional Products (16% of 2009 Operating Income)

The professional products segment produces products that are used by professional stylists in hair salons. It achieved annual growth of -3.3% like for like.

  • L'Oreal Professionel- this line is marketed to hairstylists and colorists with products and techniques to reinterpret catwalk trends and make them accessible to their customers. Twice a year sponsors Color Collections to discuss new developments in hairstyling. L'Oreal Professionel products are not sold directly to consumers and are only available in hair salons.
  • Kérastase- a luxury haircare line for women. Kérastase is sold exclusively in salons and includes products that are meant for salon-use only as well as those that can be purchased by consumers.
  • Matrix- this line provides affordable haircare products and training programs specifically for hairdressers.
  • Mizani- a salon-exclusive line that specializes in haircare geared to a spectrum of different hairstyles.
  • Redken- a New York City-based line that has built an image on an alternative, urban aesthetic. Key Products include Key Soft and Color Extend and Redken has products for both men and women.
  • Shu Uemura Art of Hair- a luxury haircare brand that not only produces and sells its own products, but also specializes in exclusive salon-only beauty techniques.

Luxury Products (21% of 2009 Operating Income)

The luxury products division sells its goods through a smaller collection of department stores and the boutique's own retail locations. It achieved annual growth of -9.0% like for like.

  • Biotherm- a skincare line centered on a trademarked substance: Pure Thermal Plankton™. This substance is used in Biotherm's entire product line, some notable products being: Aquasource, Eau d'Energie and Eau Pure.
  • Yves Saint Laurent (YSL) Beauté, Diesel, Viktor & Rolf Fragrances, Ralph Lauren, Giorgio Armani and Cacharel- YSL, Diesel, Viktor & Rolf, Giorgio Armani, Cacharel and Ralph Lauren are well-known fashion brands who have a contract with L'Oreal to produce their fragrances, namely Opium (YSL), Fuel for Life (Diesel), Flowerbomb (Viktor & Rolf), Anaïs Anaïs (Cacharel), Armani Code (Giorgio Armani) and Polo Blue (Ralph Lauren). In addition to fragrance, L'Oreal also produces makeup for Giorgio Armani and YSL.
  • Kiehl's Since 1851- in existence for over 150 years, Kiehl's uses natural ingredients to produce a leading skincare and haircare line. Key products are: Kiehl's Lip Balm and Crème de corps.
  • Lancôme- an international beauty brand that sells makeup, skincare and perfumes. Notable products: Trésor, Color ID and Flextencils.
  • Shu Uemura- Started in 1983, this brand uses natural ingredients for its luxury makeup and skincare lines. Key products include shu uemura Cleansing Oils, Eye Lash Curler and Despea Water.

Active Cosmetics (9% of 2009 Operating Income)

This segment produces skincare products sold in pharmacies and specialty drugstores. It achieved annual growth of -1.5% like for like.

  • La Roche-Posay- this brand provides skincare products to dermatologists for use on their patients. All products are formulated with La Roche-Posay Thermal Spring Water, which contains selenium and has documented beneficial effects on skin. Notable products: Lipikar, Redermic and Novalip lipstick.
  • innéov- product line that uses nutritional supplements to promote hair and skin health. Notable products are innéov Firmness and innéov Hair Mass.
  • Skinceuticals- provides skincare products through dermatologists, plastic surgeons and other skincare professionals worldwide. This line is dedicated to improving skin health, and is not as focused on trends as L'Oreal's other skincare brands.
  • Vichy- a men's and women's skincare line that takes a medical approach to skincare. It is the top brand in pharmacies in Europe and notable products include Aqualia, Normaderm and Dercos
  • Sanoflore- a brand that focuses on skincare products derived only from organic sources (plants). Sanoflore is a producer, distiller and product designer, meaning L'Oreal is involved in all stages of production, from growing the component plants to designing the finished product.

The Body Shop and Dermatology are individual stores owned by L'Oreal and contributed $138 million to total group operating income in 2009. [10]

Trends and Forces

32% of L'Oreal's Revenue Came from Emerging Markets in 2008

Error creating thumbnail
Sales By Geographic Region for Fiscal 2008

As emerging markets in Asia, Africa, and South America grow, income growth will spur consumption. This presents an opportunity for consumer product companies like L'Oreal, and L'Oreal is already reaping the benefits. Eastern Europe, Asia and Latin America have the fastest-growing sales, ranging from 15.8% to 21.5%.[11]

During 2008, however, the economies of major markets such as North America and Western Europe slid into a recession. North American sales decreased by 0.2% whereas Western Europe sales increased by a relatively modest 3.6%.[11] The segment that had the smallest sales increase was luxury products--as consumers in North America and Western Europe cut back on their spending, the first products that they decide to go without in order to save money are specifically luxury products--they instead either trade down to lower-priced goods or forgo them altogether. The benefit of its international exposure means the effects of poor sales do not have as high an impact as it would on a company that is based solely in North America or Western Europe.

Aging Populations Demand More Cosmetics

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Population Increases for American citizens under 50 and over 50

L'Oreal projects that by 2025 41.5% of all the people in Europe, the US, and Japan will be over 50 years old (34% were over 50 in 2005).[12] As the baby boomer population ages, the total number of Americans older than 50 has increased at a faster rate than the number of Americans younger than 50 (5,757 per year compared to the under-50 set, which increases at an average rate of 1,677 per year). In addition, the median age for Americans has increased steadily from 2000 to 2008. This is a promising trend for L'Oreal because older age groups demand more cosmetics, especially anti-aging skin care and other age related products. Despite the fact that worldwide demand for cosmetics, skincare and haircare products has slowed in 2008, L'Oreal's market share has increased 0.6% to 15.8%[13]

Male Cosmetics on the Rise

The usage of male cosmetics has grown considerably over the last two decades. From 2002 to 2005, sales of men's grooming products increased from 24% to $5 billion. That number is expected to double in 2009.[14] 89% of men polled in the United States and Europe believed good grooming was important for their professional success, and 70% of them shopped for their own skincare products, as opposed to only 48% in 2008.[14] Cosmetics companies have even begun to penetrate the over-40 market, which is not as saturated as the women's and young men's markets. In 2008 more than 3,600 men's skin care products were launched worldwide.[15] There are two key reasons why the male demographic is receiving so much attention from cosmetics companies: first and foremost, it is still not as saturated as the female market. More importantly, men have proven to be more loyal to specific products and brands than women are, who are more likely to switch to whatever the next trend is. Therefore cosmetics companies are trying to appeal to the male market in order to secure long-term loyal customers.[16] With some exceptions (Maybelline, Lancôme, Shu Uemura and Kérastase) L'Oreal's brands cater to both men and women. L'Oreal also spans different income levels, from affordable lines (Matrix) to luxury products (Yves Saint Laurent).


Neither Procter & Gamble nor Revlon are in direct competition with L'Oreal. Cosmetics makes up a small portion of Procter & Gambles business. Revlon, on the other hand, only sells cosmetics. Delivering new and innovative products is key in any beauty or fashion industry, and cosmetics is no different. Of the three, L'Oreal spends the most on R&D as a percentage of sales: L'Oreal (3.4%), Procter & Gamble (2.5%), Revlon (1.8%), Avon (0.6%), and Estee Lauder (1.1%). L'Oreal is more specialized than Procter & Gamble, and outspends Revlon on R&D, and both facts help L'Oreal remain a leader in the cosmetics market. On the basis of revenue, L'Oreal is much larger than Revlon, Avon and Estee Lauder, therefore L'Oreal has more money to spend on marketing which is an extremely important factor to success in the cosmetics industry. Although L'Oreal is dwarfed by Procter & Gamble on a sales basis, the majority of Procter & Gamble's R&D and marketing expenses go to its other product categories that form a more significant portion of its revenues.

Avon and Estee Lauder are cosmetics companies and thus in direct competition with L'Oreal. LRL dwarfs both companies in terms of revenue and spends more on R&D. However, Avon is much different from the other two companies due to its business model. Avon relies on individuals to sell its products door-to-door or to acquaintances. In this model each Avon representative is considered an independent contractor and receives a commission based on a percent of sales. This direct-selling method is meant to eliminate the middle man and decrease costs, thereby increasing the company's profits. Estee Lauder, on the other hand, produces and sells its goods wholesale to department stores and independent boutiques like Sephora. Like L'Oreal, Estee Lauder has a combination of luxury and middle-priced goods in order to appeal to as many consumers as possible.

' 2009 Revenue ($mm) Operating Income ($mm) Operating Margin % Sales Americas & (Asia) ($mm) Major Brands/Products
Revlon (REV)[17]1,29517113.2%58% (21%)Revlon, Almay, Charlie, Bozzano, Ultima II
Procter & Gamble Company (PG)[18]79,02916,12320.4%43% (17%)Pantene, Crest, Tide, Downy, Bounty, Folgers, Gillette
L'oreal (LRLCY) [19]24,7253,84015.5%24% (32%)Garnier Fructis, L\'Oreal Paris, Maybelline
Estee Lauder Companies (EL)[20]7,3234185.7% 47% (18%)Clinique, Bobbi Brown, M.A.C., La Mer, Aveda
Avon Products (AVP)[21]10,3821,0189.8%18% (12%)Avon Color, Avon Wellness, mark.

Market Share

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Worldwide Market Share


  1. L'Oreal 2009 Annual Report p.4
  2. L'Oreal 2009 Annual Report p.6
  3. L'Oreal expects China to become No.3 Market this year - Global Times
  4. L'Oreal 2009 Annual Report p.4
  5. L'Oreal 2009 Annual Report p.22
  6. L'Oreal 2009 Annual Report p.67
  7. L'Oreal 2009 Annual Report p.67
  8. [http://www.loreal-finance.com/_docs/fichiers_contenu/0000000565/2010_LOreal_Q1_220410.pdf L'Oreal Q1 2010 Sales}
  9. L'Oreal 2009 Annual Report p.22
  10. L'Oreal 2009 Annual Report p.22
  11. 11.0 11.1 11.2
  12. Oppenheim Research, Reinitiating Coverage, pg.26
  13. LRLCY 2007 Annual Report, pg.27
  14. 14.0 14.1 Rod Hagwood. Men's Skincare Goes Ubersexual and Guy-liner goes mainstream.
  15. Male Grooming on the Rise
  16. "Cosmetics firms tempt men over 50"
  17. Revlon 2009 Annual Report
  18. PG 2009 Annual Report
  19. L'Oreal 2009 Annual Report
  20. EL 2009 Annual Report
  21. Avon 2009 Annual Report
  22. L'Oreal World Presence
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