Private equity firms to buy Becca Cosmetics for $US200 million, Walgreens to shutter Beauty.com and drugstore.com, French slowdown impacts L'Oréal's half year results, and cosmetics and fragrance boost record performance for LVMH.
Private equity firms to buy Becca Cosmetics for $US200 million
Rebecca Morrice Williams, a makeup artist from Perth, founded Becca Cosmetics in the early Noughties to create "make-up that didn't look like make-up." Although a cult favourite with Australian beauty lovers because of its local origins, the brand has had an up-and-down history of success. Majority-owned by US company, Luxury Brand Partners, who also own the Oribe and R+Co haircare brands, Becca turned a corner about five years ago under the stewardship of CEO Robert DeBaker. Becca is expected to reach $US80 million in net sales by the end of the year - a 100 per cent increase on its 2015 performance of $US40 million.
A juicy prize for Castanea Partners and Main Post Partners, two private equity firms with a proven record in beauty. Castanea has an investment in First Aid Beauty and also stumped up funds for Urban Decay prior to the brand's sale to L'Oréal. Main Post invested in Too Faced Cosmetics before its 2015 acquisition by General Atlantic. According to analysts, the two companies will partner to acquire 100 per cent ownership of Becca Cosmetics for around $US200 million.
Becca scored a major goal last year through its collaboration with vlogger Jaclyn Hill - the highlighter Champagne Pop. Janet Gurwitch, Founder of , has worked for Castanea for nearly five years and will become Becca's operating partner on behalf of the company. Michael McNamara, the former Chairman of Too-Faced, will fill the same role for Main Post.
Walgreens to shutter Beauty.com and drugstore.com
It's been a big week for buyer's regret. In a rare move for the world's largest luxury goods group, LVMH sold the trademarks to the G-III Apparel Group for an enterprise value of $US650 million. The struggling licenses will join G-III's own brand labels and other major fashion licenses such as , Karl Lagerfeld and Kenneth Cole.
Walgreens is also calling time on Beauty.com and drugstore.com. The mega drugstore chain bought drugstore.com, an online retailer of drugs, vitamins and beauty products, in 2011 for $US429 million. At the time, the e-commerce company, which also operated the Beauty.com, SkinStore.com and Visiondirect.com sites, boasted three million customers and sold more than 60,000 products.
With more than $US456 million in sales in 2010, drugstore.com was the eighth largest online retailer in the US. Founded in 1998, the company attracted high-profile investors such as Kleiner Perkins Caufield & Byers. Melinda Gates, wife of Microsoft's Bill Gates, and Amazon's chairman Jeff Bezos are former board members.
The company never regained the momentum of its earlier days following the Walgreens buyout, and will be closed down at the end of September. Beauty.com and drugstore.com did help Walgreens to create new digital capabilities with a stronger e-commerce approach. Walgreens will focus on Walgreens.com to build omni-channel capabilities. Skinstore.com was sold off earlier this year to The Hut Group, a UK based online retailer who specialise in lifestyle, health and beauty products, and Walgreens will retain ownership of Visiondirect.com.
French slowdown impacts L'Oréal's half year results
First the good news. L'Oréal has announced a 4.2 per cent year-on-year growth in sales to 12.89 billion euros ($AUD18.85 billion) for the first half of the year. But second quarter sales didn't meet analysts' estimates because of lower-than-expected revenues in the French giant's home market, where tourism has dipped by double digits following the terrorist attacks earlier this year.
The US is a major bright spot. Strong North American results are the main reason L'Oréal has been on a spending spree in recent years, acquiring such brands as Urban Decay and NYX Professional Makeup. Last week's $US1.2 billion acquisition of US-based IT Cosmetics was the multinational's biggest buyout in eight years.
E-commerce is another major growth area. Sales jumped 33 per cent in the first six months of the year, accounting for six per cent of L'Oréal's global sales. The consumer products division was also up 4.7 per cent, with the revenues of the professional products division rising 2.2 per cent.
Bullet performer brands for the multinational included Maybelline New York, L'Oréal Paris, essie and NYX Cosmetics. L'Oréal Luxe continue to surf the prestige beauty wave via sustained growth through power brands such as Lancôme , Yves Saint Laurent and Giorgio Armani. The Active Cosmetics Division (La Roche-Posay, Vichy etc) also increased market share. There are weak spots other than the French downturn, though. , Magic Holdings, the Chinese facial mask brand acquired by L'Oréal in 2013, and SalonCentric, one of the largest distributors of salon hair and beauty products in the US, did not live up to expectations in the first half of the year.
Cosmetics and fragrance boost record performance for LVMH
Sephora, the world's largest beauty chain, continues to rack up double digit growth and gain market share in all regions, reports parent company LVMH. The luxury goods market leader reported record revenues of 17.2 billion euros ($AUD25.31 billion) for the first half of the year. A four per cent hike in organic growth.
Beauty and perfume sales rose 8 per cent to 2.34 billion euros ($AUD3.44 billion) from January to June. Christian Dior turned in a stellar performance with market gains in every region, thanks to new launches such as the Sauvage men's fragrance and global bestsellers like J'adore and Miss Dior. 's new eyebrow collection hit the sales sweet spot from its launch date. Guerlain's La Petite Robe Noire lip and nail colours upped the prestige brand's cred among Millennials and Makeup For Ever continued to be a popular choice among the under-30s.
Overall, LVMH had a similar experience to L'Oréal in the first half of the year. The US market performed strongly, but France experienced a decline in sales because of the reduction in international tourist numbers. The Asia/Pacific region has also shifted from runaway to solid sales growth, reports LVMH.
Snippets from the wires
- Fragrance brands might not be too happy. But anyone who has ever complained that a scent only lasted on their skin for an hour or two will love Fragrance Lock. Launching in the US on HSN this week, the high-tech finishing spray extends the wearability of a fragrance by up to 12 hours through a breathable mesh on the skin which decelerates a perfume's evaporation rate. Check it out on fragrancelock.com
- P&G is still selling off brands. The multinational acquired the TAG brand when it bought Gillette. At the height of its popularity in 2009, TAG accounted for 20 per cent of the men's body spray market in the US. My Imports USA has bought the brand from P&G for an undisclosed sum and - like Unilever's Lynx - plans to extend into deodorants, body washes and haircare.
- Little girls have been experimenting with their mothers' makeup for generations. Mintel says that the popularity of YouTube tutorials has intensified the decades-old habit. According to the researcher, 54 per cent of girls aged 12 to 14 in the US use mascara, eyeliner and eyebrow products. A huge 45 per cent use foundation and 30 per cent apply blushers and bronzers.
- Inter Parfums have credited its acquisition of the Rochas fragrance brand from P&G in June last year as a major driver of its 2016 quarter 2 sales. The company posted overall net sales of $US117.2 million - a jump of 14.8 per cent over the same period last year. and also continued their winning streaks. In the US, First Instinct, the debut Abercrombie & Fitch scent under the Inter Parfums license, and the Hollister Wave his-and-hers duo also elevated the bottom line. There's more good news to come, says Jean Madar, Chairman and CEO of Inter Parfums. The new Coach fragrance will launch in 3000 doors in the US by mid-September and should be available in 20,000 doors worldwide by the end of 2017.
