Yahoo  Apr 6  Comment 
Nestle's (NESN.S) outgoing chairman said on Thursday he could not predict what Nestle would do with its 23 percent stake in French cosmetics group L'Oreal (OREP.PA) after the termination of an agreement between the Swiss food company and the...
The Times of India  Mar 22  Comment 
L'OREAL-BODY SHOP/LOANS:LPC-L’Oreal targets direct lenders to fund Body Shop sale
Forbes  Feb 23  Comment 
In its Q4 2016 earnings call, L’Oreal admitted to exploring options to sell off its ownership of The Body Shop. The persistent weak performance of the Sussex-based beauty retailer, which is known for its natural and fair-trade ingredients, led...
newratings.com  Feb 10  Comment 
CLICHY (dpa-AFX) - Cosmetics and beauty products giant L'Oreal Co. (LRLCY.PK) reported that its net profit attributable to owners of the company for fiscal year 2016 declined to 3.11 billion euros or 5.50 euros per share from 3.30 billion...
Wall Street Journal  Feb 9  Comment 
French cosmetics giant L’Oréal confirmed that it is reviewing options for its struggling chain The Body Shop.
BBC News  Feb 9  Comment 
With French owner L'Oreal wanting to put The Body Shop up for sale, BBC News asks what's gone wrong at the UK cosmetics chain?
Forbes  Feb 8  Comment 
L’Oreal has been steadily restructuring its media spending in favor of digital channels, as well as other digital investments. In 2013 the company allocated 15% of its media budget for digital channels and this number increased significantly to...

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L'Oreal is the world's largest producer of health and beauty products with revenues of €17,063 M and a world market share of 15.3% 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 26%, respectively.[2]

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.[3]

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

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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.


L'Oreal's cosmetics branch made up 93% of the company's revenue in 2007.[4] 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 about half its sales from hair care (24%) and skin care (26%), and together those two segments make up about 55% of the world cosmetics market.

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Trends and Forces

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60% of L'Oreal's Revenue Growth Came from Emerging Markets in 2007

Each year 60 million new consumers achieve an income level that allows them to buy more sophisticated cosmetics products.[5] 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. In 2007, L'Oreal generated 29% of their total revenue and 60% of their growth from emerging markets. For the last two decades, cosmetics market share in North America and Japan has been falling and Western Europe has been essentially flat. On the other hand, market share for the rest of the world, made up mostly by emerging markets, has grown from 22% in 1997 to 33.5% in 2007.

Aging Populations Demand More Cosmetics

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). This is a promising trend for L'Oreal because older age groups, comparatively, demand more cosmetics, especially anti-aging skin care and other age related products. In addition, cosmetic demand from all age groups, in particular those between 40 and 70, has been on a steady incline. In 2005, half of all people between the age 55-59 used anti-age skincare, according L'Oreal.

However, while the percentage of older people in these populations is growing, the actual number of older people is not necessarily increasing. Native populations in France, Italy, Netherlands, Japan, as well as many other developed countries, are growing older, percentage wise, as a result of lower birthrates. Birthrates below replacement in these countries, as well as below historical levels, means that new generations are smaller than previous ones creating a proportionally older population.. While the US experiences a similarly low birthrate from Caucasians, aging baby boomers means that the older population is in fact larger than in the past.

Male Cosmetics on the Rise

Cosmetics for men makes up about 7-8% of the world cosmetics market. However, about 22% of L'Oreal's sales come from male cosmetics, primarily in the form of cologne and deodorant. Together male perfumes and deodorant made up about two thirds of L'Oreal's male cosmetic sales in 2007. The usage of male cosmetics has grown considerably over the last two decades. From 1990 to 2001, men's skincare usage increased from 4.5% to 21%. In addition, men skincare usage in Western Europe has increased about 28% between 2001 and 2005.


Cosmetics makes up a small portion of Procter & Gambles business, while Revlon 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 = 3.5%, Procter & Gamble = 2.7%, and Revlon = 1.7%. L'Oreal is more specialized than Procter & Gamble, and far outspends Revlon on R&D, and both facts help L'Oreal remain a leader in the cosmetics market.

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



  1. LRLCY 2007 Annual Report, Consolidated Financial Results, pg. 20
  2. LRLCY 2007 Annual Report, pg.21
  3. LRLCY 2007 Annual Report, Research & Development, pg. 55
  4. LRLCY 2007 Annual Report, pg.20
  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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