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 SkinCeuticals, also conducts cosmetology and dermatology research. Generating more than half of its sales 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 sells its products across 130 countries. Worldwide, the beauty company boasts two dozen research centers and about 15 evaluation centers, 45 factories and some 70 distribution centers, and a handful of development and learning centers.
Sales and Marketing
The company sells its beauty items globally through retailers, distributors, and online. L'Oréal's consumer products division distributes products worldwide to mass-market channels, such as supermarket, drug stores, and mass merchants.
L'Oréal has been posting sales increases since 2010. Thanks to the company's focus on growing its business in emerging markets, L'Oréal's revenue reached an all-time high of €23 billion in 2013. It attributes the gains to growth across all divisions, as well as growth in revenue from emerging markets which doubled between 2000 and 2013.
L'Oréal's cosmetics segment generates 93% 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). The rest of its revenue comes from its Body Shop (4%) and Dermatology (3%) businesses.
Emerging markets are a key growth avenue for the Paris-based cosmetics giant. To this end, L'Oréal in 2013 acquired Colombian mass-market make-up company Vogue to give it traction not only in Colombia but in Ecuador and Peru. The French cosmetics giant acquired the health and beauty business of Interconsumer Products (ICP) in Kenya in 2013, as well. With a turnover of approximately €15 million in 2012, ICP is a significant player on the Kenyan beauty market, with strong positions in the hair and skin care markets. It also created L’Oréal KSA, a new subsidiary based on a joint venture with Al Naghi Group. Products are made in Nairobi and sold in East African countries. The company strengthened its presence in Africa by opening a plant in Cairo, Egypt. 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.
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, in 2012 for €200 million ($264 million).
In recent years, the firm has been expanding its professional division. L'Oréal in 2009 acquired three regional US distributors of professional products to salons: Idaho Barber and Beauty Supply in the Northwest, and Maly's Midwest, and Marshall Salon Services, which both operate in the Midwest. Also in the US, the firm acquired Essie Cosmetics, a maker of nail polish sold in salons and spas, enabling L'Oréal to boost its presence in the nail care market.
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 2008 paid compatriot PPR (since renamed Kering) 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 company also has formed The Laboratories Inneov with Nestlé to develop diet supplements for skin care, hair care, and nail care.
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 31% of the company's shares, while Nestlé owns about 30%. 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 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.