Unilever: Rumours and results; Kylie Jenner tapped as the highest ranked female on Forbes top earning celebrities list; The Hut Group buys Language Connect; and candles dominate fast-growing US home fragrance market.
Unilever: Rumours and results
The world's leading financial publications and websites have refrained from commenting on the rumour that Unilever is considering a buyout of Space NK for three reasons. According to a recent large scale study, only 17 per cent of acquisition deals involving leaked information are completed. Prior to Unilever's name being mentioned, the first insider whispers fingered The Hut Group as a potential buyer for Space NK. Also, like many beauty and personal makers, Unilever has been trying to reduce its dependence on retailers by boosting e-commerce sales and has announced it plans to double direct-to-consumer online sales from 5 per cent to 10 per cent of total revenues.
Many analysts have also pointed out that acquiring a bricks-and-mortar retailer would be a first for Unilever. But the wild card in this argument is the precedent of Sephora. LVMH, the world's largest luxury goods group, bought the company in 1997 when it was a France-based network of only 54 stores. Sephora is now the world's largest speciality beauty chain with more than 2300 locations and close to half of the brands it stocks are owned or licensed by LVMH.
Whatever happens future growth is the master plan. Beauty and personal care has become Unilever's largest division, reaching revenues of US$23.4 billion in 2017. The multinational committed to funding beauty and personal care acquisitions in 2013 in a bid to reduce its dependence on its flatlining food business. Over the past three years, Unilever has indulged in a targeted corporate spending spree to acquire prestige brands such as Murad, Dermalogica, Hourglass and Carver Korea. Its personal care division includes oral care and deodorants, but 70 per cent of its revenues come from skin and haircare.
Unilever hit global headlines last week predominantly because of its half-year results. Currency fluctuations, weak pricing and a truckers strike in Brazil, one of its major markets, resulted in a 5 per cent drop in overall turnover to US28.95 billion. Personal care and beauty which account for 39 per cent of Unilever's business was a bright spot with underlying growth of 2.7 per cent. Growth in the prestige segment jumped 6 per cent over the period and power brands such as Vaseline, Dove, Sunsilk and Rexona also put in strong performances. CEO Paul Polman remains optimistic and expects sales growth for the full year to reach 3 to 5 per cent.
Kylie Jenner tapped as the highest ranked female on Forbes top earning celebrities list
Forbes annual list of the world's 100 highest-paid celebrities is dominated by men – 85 by contrast to only 15 women. The rankings cross many categories from sport through music, TV, comedy and acting and the gilded elite's combined pre-tax earnings over the past 12 months totalled US$6.3 billion – up 22 per cent from the previous year. With only two exceptions – Judge Judy and J.K Rowling – this year's top 15 female celebrity earners have a foot in the beauty industry through their own brands, endorsements and licenses.
- Kylie Jenner (No. 3) - US$166.5 million
- Judy Sheindlin ( No. 4) - US$147.5 million
- Ellen DeGeneres (No.15) - US$87.5 million
- Katy Perry (No.19) - US$83 million
- Taylor Swift (No.21) - US$80 million
- Kim Kardashian West (No.30) - US$67 million
- Beyonce ( No.35) - US$60 million
- J.K. Rowling ( No.42) - US$54 million
- Pink ( No.45) - US$52 million
- Lady Gaga (No.49) - US$50 million
- Jennifer Lopez (No.53) - US$47 million
- Sofia Vergara (No.68) - US$42.5 million
- Scarlett Johansson - (No.76) - US$40.5 million
- Rihanna ( joint No.84) - US$37.5 million
- Kris Jenner ( joint No.84) - US$ 37.5 million
The Hut Group buys Language Connect
Over the past two years, UK-based The Hut Group (THG) has spring boarded its annual sales to nearly AUD$1.3 billion through a series of high profile acquisitions such as Illamasqua, ESPA, RY.com.au and Eyeko. The fast-growing online retailer has become a truly global entity with overseas markets accounting for more than 70 per cent of annual revenues. The company also secured an AUD$886 million credit facility to continue its ambitious expansion in 2017, following a US$200 million injection of investor funds in early 2016.
With international sales making up so much of its business, THG has bought Language Connect, a high profile company that specialises in language translation and localisation services. Details were not disclosed but THG rates the acquisition as a significant investment. Founded in 2003, Language Connect has six offices worldwide in London, New York, Melbourne, Singapore, Dubai and Munich and its 900-strong customer base includes such top-flight names as Thomson Reuters, Twenty First Century Fox and global law firm, Norton Rose Fulbright.
The sort of expertise that will further leverage THG's already impressive network and platforms, covering 160 localised websites and 35 languages which attract 500 million visits a year.
Candles dominate fast-growing US home fragrance market
The home fragrance market is as dominated by international players as its beauty and personal care counterparts. Many of the trends Australians are exposed to emanate from overseas and the latest Kline report on the US home fragrance market mimics our own.
The largest product category in the US is candles which account for 41 per cent of overall market sales, says the researcher. Mass market candles dominate but luxury candle sales enjoyed double-digit growth in 2017. Newell Brands which owns the Yankee Candle (sold online and in Spotlight stores in Australia) is a major player. Bath & Body Works is another segment leader and niche brands such as NEST and Voluspa posted strong sales in the US over the past 12 months.
Innovation and new formats are also powering the diffuser category, says Kline Consumer Products senior analyst Dana Kreutzer. "E-commerce and technology are transforming this segment with new user experiences for luxury brands and small start-ups alike", she notes.
Snippets from the Wires
- Brands are announcing shade extensions for their foundation ranges in rapid-fire succession. Last week, Lancôme assembled a team of 10 makeup artists in New York to achieve a Guinness World Record title for "the most people matched with a foundation in 8 hours". Working furiously, the MUAs matched the skin tones of 1327 women with the prestige French brand's Teint Idole Ultra 24H Long Wear Foundation.
- Dubai Duty Free (DDF) is one of the hotspots of global travel retail. Sales increased 10 per cent in the first half of the year to reach revenues of US$1 billion. Perfumes proved a perennial performer with sales surging 15 per cent to US$146.46million. Cosmetic sales also increased by 27 per cent and DDF is confident of reaching the US$2 billion sales milestone by December.
- Australian natural and organic makeup and skincare brands have been targeting leading Asian markets for some time. Mintel's latest data confirms that Asia/Pacific consumers are more interested in natural beauty claims than their Western counterparts. Botanical/herbal claims are present on 67 per cent of shampoos sold in the region (7% higher than the global market), on 39 per cent of facial cosmetics (12% higher) and 25 percent of lip colour products (3% higher).
