QUOTE AND NEWS
SeekingAlpha  Jul 22  Comment 
Reuters  Jul 22  Comment 
Cosmetics company L'Oreal has agreed to buy IT Cosmetics, a U.S. maker of beauty products for women with severe skin conditions, for $1.2 billion, the French firm said on...
Forbes  Jul 18  Comment 
Q&A with Rachel Weiss, VP, Innovation and Entrepreneurship at L’Oreal, regarding women in tech and the rise of emojis
The Economic Times  Jul 11  Comment 
Data suggest that Maybelline New York and L'Oreal Paris brands have together garnered, on an average, a monthly market share of about 43 per cent
The Times of India  Jul 10  Comment 
Global cosmetics giant L'Oreal - with its combined strength of two brands Maybelline New York and L'Oreal Paris - has acquired a larger share of the cosmetics market at leading online beauty store Nykaa.
Reuters  Jul 7  Comment 
The daughter of L'Oreal heiress Liliane Bettencourt has been placed under investigation for allegedly giving money to an accountant whose testimony in another case helped her protect her mother's fortune, the daughter's lawyers said on Thursday.
Benzinga  Jun 29  Comment 
CNN Money reported Wednesday on succeeding in the new global economy, listing 25 of the world’s top employers of new graduates. Related Link: Top 10 Most Sought-After Employers In The United States The top 10 were as follows: Alphabet...
Forbes  Jun 22  Comment 
The fast growing Indian beauty market holds strong potential for L’Oreal , which has been looking to grow market share in the region. According to experts, India’s retail beauty and cosmetics industry is likely to reach $ 2.68 billion by 2020,...
The Hindu Business Line  Jun 17  Comment 
French cosmetics and beauty major L’Oreal, which aims to add more than one billion new consumers globally over the next decade, believes a significant contribution will come from India. The company h...
The Economic Times  Jun 15  Comment 
The new range called ‘Garnier Ultra Blends’ will be spread across shampoo, conditioners and oil and cream segment.




 
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L'Oreal is the world's largest producer of health and beauty products with revenues of €17,063 M in 2007.[1] L'Oreal has 27 brands that offer products in hair care, skincare, make-up, deodorants, and perfumes. Hair care and skin care make up the largest percentage of L'Oreal's sales, 24% and 25%, respectively.

L'Oreal generated 29% of its revenue and 60% of its growth from emerging markets in 2007. L'Oreal has been effectively building its presence in emerging markets for the last 10 years as in 1999 it made up 17% of total sales. L'Oreal's international growth has been supplemented by its ability to deliver innovative new products to the market. L'Oreal spent €560M (3.5% of revenue) on research and development and registered 576 patents in 2007.[2]

L'Oreal had a lull in organic sales growth in 2006 when it dropped to 5% from over 10% in 1999. As a result, L'Oreal increased its acquisitions to help drive growth. In July, 2006 L'Oreal acquired The Body Shop which now makes up about 5% of L'Oreal's revenues. This aquisition received much criticism because consumers were concerned that The Body Shop would become less socially aware under its new management. L'Oreal also acquired Beauty Alliance, a major distributor of professional hair care products, and YSL Beaute, a luxury fashion company, in 2007 and early 2008, respectively.


Business Outline

L'Oreal operates the following business divisions: Consumer Products (49%), Professional Products (14%), Luxury Products (23%), Active Cosmetics (7%), The Body Shop (5%), and Dermatology (2%). Professional products commands the largest market share, compared to other divisions, in all of L'Oreal's geographic segments.

Cosmetics

Cosmetics primarily include products in hair care, make up, colourants, skin care, and perfumes. L'Oreal has a 15.3% market share in the world cosmetics market and this market share has been growing since 1996. L'Oreal gets the almost half its sales from hair care (24%) and skin care (25%), and together those two segments make up about 55% of the world cosmetics market.



Trends and Forces

Older Women and Men Will Drive Cosmetics Demand

Traditionally women aged 15-30 formed the consumption base for cosmetics companies. Since 2001 7 million new men consumers entered the cosmetics market. This growth is shown in the accompanying table. Men are beginning to purchase facial skincare products.


Emerging Market Growth Will Increase Global Disposable Income

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. Each year 60 million new consumers achieve an income level that allows them to buy more sophisticated cosmetics products.[5] This demand growth will be seen in both the middle and high income segments of the consumer population as seen in the table.

Competition

Company Revenue (mm) Operating Income (mm) Operating Margin R&D Spending (mm) Major Brands/Products
Revlon (REV) [6] $1,400 $121 10.14% $24.4 Revlon, Almay, Charlie, Bozzano, Ultima II
Procter & Gamble[7] $76,476 $15,450 20.20% $2,075 Pantene, Crest, Tide, Downy, Bounty, Folgers, Gillette
L'Oreal[8] €17,063 €2,827 15.5% €560 Garnier Fructis, L'Oreal Paris, Maybelline



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References

  1. LRLCY 2007 Annual Report, Consolidated Financial Results, pg. 20
  2. LRLCY 2007 Annual Report, Research & Development, pg. 55
  3. LRLCY 2007 Annual Report, Market Trends, pg. 31
  4. LRLCY 2007 Annual Report, Market Trends, pg. 31
  5. LRLCY 2007 Annual Report, Market Trends, pg. 31
  6. REV 2007 10-K, Item 15, pg. F-5
  7. PG 2007 10-K, pg. 49
  8. LRLCY 2007 10-K, pg. 23
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