With a goal of doubling its consumer base from 1 billion to 2 billion within 15 years, L’Oréal has engaged in a number of strategies to realize its ambitious plan: adding subsidiaries, building strategically-located manufacturing and R&D centers, and acquiring brands. During its first quarter conference call on Thursday, April 18, we saw L’Oréal Group’s sales rise a modest 5.1% or 5.5% like for like to $7.8 billion (5.93 billion euro). And, we saw how new and developing markets will be crucial to their 15-year goal: sales in new markets grew 6.7% or 9.4% to $2.9 billion, while sales in developing markets are expected to reach 50% in the near future, up from 39% in 2012. “These strategic moves and quality initiatives in all divisions, both in developed countries and in new markets makes us confident in our ability to outperform the market in 2013, and to achieve another year of (sales and profit) growth,” said L’Oréal Chairman and Chief Executive Officer, Jean-Paul Agon. Some key points from Thursday’s call include:
*Asia-Pacific, currently L’Oréal’s largest developing market with sales of $1.5 billion, saw sales in China jump 20%. L’Oréal has set a goal of capturing 250 million new Chinese luxury consumers. In the next month, Clarisonic skin care items will enter the market and an Yves Saint Laurent Beauté boutique is planned for the region. L’Oréal has also progressed in India and ASEAN, although sales in Japan and Korea have been weak. L’Oréal recently opened its largest factory in the world in Indonesia and created a R&D center in Mumbai to study Indian hair and skin.
*The company has been minding the launch of L’Oréal Paris Advanced Haircare in North America, which posted 2.8% dollar market share in January, 3.4% in February and 4.1% in March. Professional hair care brand Kérastase is introducing its first styling range backed by actress Kate Moss. L’Oréal also reported that sales of its freshly acquired Urban Decay brand jumped 40% in the quarter and will be expanded “step by step.” In North America, L’Oréal’s business has been growing in both the mass and prestige sectors with an overall uptick of 8.5% to $1.8 billion.
*In the Africa and Middle East region, sales in the quarter jumped 11% or 15%, like for like. A manufacturing plant will be opening shortly in Egypt, while company subsidiaries have been established in Kenya and Saudi Arabia. L’Oréal has also just acquired Kenya-based Interconsumer Products Ltd., a major player in hair and skin care in East Africa with brands like Nice & Lovely, Gold Touch and Queen Elizabeth. Already, L’Oréal has been developing the African market with its portfolio of Softsheen-Carson products.
*Sales rose 5.8% or 11.8% like for like in Latin America where, L’Oréal has constructed the largest hair color plant in the world in Mexico. It has also completed the acquisition of the Vogue make-up brand, a mass-market leader in Columbia. Meanwhile, sales in Brazil jumped 13%, gaining L’Oréal market share.