L'Oréal's success is built on a strong foundation. The world's largest beauty products company, it creates cosmetics, perfume, and hair and skin care items. Its brands include L'Oréal Paris and Maybelline (mass-market), Lancôme (luxury), and Redken and SoftSheen/Carson (retail and salon). L'Oréal, which owns Dallas-based SkinCeuticals, also conducts cosmetology and dermatology research. With more than 50% of sales generated outside Europe, L'Oréal has focused on acquiring brands in those markets. L'Oréal also owns the UK-based natural cosmetics retailer The Body Shop International, which numbers some 2,550 stores worldwide. The firm's dermatology branch Galderma is a joint venture between L'Oréal and Nestlé.
L'Oréal's cosmetics branch generates more than 90% of its revenue and is organized into four divisions: Professional (salon hair care); Consumer (hair and skin care, makeup); Luxury (beauty products, fragrances); and Active Cosmetics (dermo-cosmetic products). In 2010 sales of the company's cosmetics increased by about 6% (at constant exchange rates) vs. 2009, after posting a essentially flat comparison in 2009 vs. 2008. The Body Shop's sales fell by about 1% in 2010, while L'Oréal's detmatology unit saw sales increase by about 16%. New markets, which includes Brazil, China, Mexico, Russia, and India, all enjoyed double-digit growth. Emerging markets, particularly in Asia and Latin America, are a key growth aveneue for the Paris-based cosmetics giant, which sells its products in some 130 countries worldwide. To this end, L'Oréal in 2013 agreed to acquire Colombian mass-market make-up company Vogue, which logged some 30 million euros in revenue in 2011. The purchase gives L'Oréal traction not only in Colombia but in Ecuador and Peru.
In recent years, the firm has been expanding its professional division. To that end, in 2009 L'Oréal acquired three regional US distributors of professional products to salons: Idaho Barber and Beauty Supply in the North West, and Maly's Midwest, and Marshall Salon Services, which both operate in the Midwest. Also in the US, in April 2010 the firm agreed to acquire Essie Cosmetics, a maker of nail polish sold in salons and spas. The purchase will enable L'Oréal to boost its presence in the nail care market.
Consumer brands, such as GARNIER, L'Oréal, Maybelline, and Softsheen/Carson contribute more than half of the company's cosmetic sales. To add to its consumer side of the business, L'Oréal acquired Cadum, maker of baby products, to its consumer products division in 2012 for € 200 million ($264 million). Cadum reported sales of €58 million in 2011. However, its well-known luxury brands, which are sold at department store cosmetic counters, perfumeries, and L'Oréal's own boutiques contribute about a quarter of cosmetics sales and continue to gain in popularity.
Luxury brands, including Kiehl's, Lancôme, Yves Saint Laurent, and Giorgio Armani, continue to gain popularity. To maintain its momentum in the luxury sector, L'Oreal in mid-2008 paid compatriot PPR more than $2 billion to acquire the rights to the Yves Saint Laurent, Boucheron, Stella McCartney, and Oscar de la Renta fragrance and cosmetics brands, among others.
L'Oréal expanded its Active Cosmetics division (with existing brands Vichy, La Roche-Posay, and Inneov) by folding SkinCeuticals into the operation. Buying SkinCeuticals has opened doors for the company in the dermatology arena, which caters to high-end spas and plastic surgeons. The purchase builds on previous acquisitions, such as Sara Lee Corporation's sun care brand Delial and Sanoflore, maker of certified organic cosmetics. L'Oréal derives only about 3% of its sales from dermatology subsidiaries, including Galderma (dermatology products) and Sanofi (French pharmaceuticals group). The company also has formed The Laboratories Inneov with Nestlé to develop diet supplements for skin care, hair care, and nail care.
The French cosmetics giant is also expanding internationally. It tapped into the growing Turkish hair care market with its purchase of Canan in early 2008. (Founded in 1981, Canan generated about €26 million in 2006 and makes the Ipek brand, which is distributed in mass-market and retail outlets throughout Turkey.) L'Oréal has also enlisted the Indian actress Freida Pin (who appeared in Slumdog Millionaire) as a spokeswoman, hoping to gain traction in the Indian market. L'Oréal has set a target of increasing its customer base from 1.2 billion to 2.5 billion, with much of that growth coming from India and elsewhere outside Europe.
Liliane Bettencourt, director and daughter of founder Eugène Schueller, is L'Oréal's primary stockholder and the world's second-richest woman. She and her family own about 27% of the company's shares, while Nestlé owns 26%. The Bettencourts and Nestlé have been indirect owners of L'Oréal through the Gesparal SA holding company for some 30 years. (Gesparal was merged into L'Oréal in 2004.) In early 2009 both parties became able to sell their shares for the first time since 2004, which led to speculation that Nestlé may attempt to take over L'Oréal. Further fueling suspicion has been a deepening estrangement between Bettencourt and her only daughter as well as a scandal that points to Bettencourt and her advisers for massive tax evasion and alleged illegal contributions to French President Nicolas Sarkozy. Nevertheless, the 89-year-old Bettencourt in April 2011 was re-elected to the board for a four-year term. She has said that she is keen to resist advances from suitors, such as Nestlé. – less