Net sales at Ulta Beauty reach US$6.8 billion; German national and organic cosmetics market attracts one million new customers; TSG acquires CorePower Yoga from LVMH investment arm; Chinese firm targets global collagen supplement market.
Net sales at Ulta Beauty reach US$6.8 billion
As some Australian retailers felt the pinch in the final quarter of 2018, Ulta Beauty's net sales jumped 9.7 per cent to US$2.1 billion over the period, by contrast to US$1.9 billion 12 months earlier. Full year results were even more impressive, lifting 14.1 per cent to US$6.7 billion –up from US$5.88 billion in fiscal 2017. Priceline and Chemist Warehouse keep a close eye on Ulta Beauty, which has morphed from being a drug store chain to the largest specialist beauty retailer in the US.
Better yet, the outstanding performance hinged on an acceleration in comparable sales in our retail stores, primarily driven by traffic, says CEO Mary Dillon. She also singled out digitally-native brands such as Kylie Jenner where Ulta Beauty has exclusive point-of-distribution in bricks-and-mortar as a key driver. Shares spiked 4 per cent to US$325 on the news to confirm Ulta Beauty as one of the top performers on the S&P 500, gaining 27.6 per cent since the beginning of the year.
E-commerce growth has been phenomenal, rising 25 per cent in the fourth quarter. Ulta has also taken the fight to Amazon in the US, attracting customers who like to buy beauty products in store. The company plans to open 80 new stores in the US by the end of the year, in addition to 20 remodels and 270 store refreshes. Online growth will continue to soar and is expected to spike 20 to 30 per cent over the current fiscal year.
German national and organic cosmetics market attracts one million new customers
When Australian natural and organic brands focus on export sales, Germany usually enters the conversation right after China. The UK is the biggest European market for colour cosmetics, but Germany is the number one market in overall beauty sales in Europe and the biggest natural and organic market.
Top-of-mind is the giant German chain Douglas, which has spring boarded KORA Organics and Lanolips to name two Australian brands into Germany and beyond in recent years. Douglas Parfumerie is the largest perfume and cosmetics chain in Europe with 2400 stores in 21 countries. With an annual turnover of 3.3 billion euros (AUD$5.27 billion), it is majority-owned by CVC Capital Partners, the global private equity firm.
The company traces its name back to a Scottish soap maker, John Sharp Douglas, who set up shop in Hamburg in the early 19th century. Following the fall of the Berlin Wall, Douglas expanded rapidly into Eastern Europe. Over the past five years, it has acquired other European beauty retailers, including BodyBell and Perfumerias in Spain, Limoni and La Gardenia in Italy and Nocibe in France, the main rival of Sephora.
The German market for natural and organic cosmetics rose 5.8 per cent in 2018, reports market researcher Naturkosmetik Konzepte, to reach 1.26 billion euros (AUD$2.01 billion). In 2018, more than one million additional consumers in Germany purchased natural cosmetics, with 40 per cent purchasing this category for the first time, says the researcher. German consumers are increasingly looking for the same attributes as their Australian counterparts – ethical sourcing, zero waste, sustainability and smaller brands that reflect their beliefs and lifestyles.
TSG acquires CorePower Yoga from LVMH investment arm
The explosion of athleisure wear, health foods and supplements and sports accessories has been matched by the acquisitions of major exercise chains worldwide and in Australia. L Catterton is the largest and most consumer-focused private equity company in the world and is a master at spotting trends before they hit their full potential. The investment arm of LVMH, the world's largest luxury goods group, has sold CorePower Yoga, the fastest-growing yoga fitness studio in the US with 200 locations in 23 states, to leading private equity company, TSG Consumer Partners, for an undisclosed sum.
TSG has a strong track record in beauty and fitness with past and current investments in Planet Fitness, IT Cosmetics, HUDA Beauty, Smashbox Cosmetics and e.l.f Cosmetics. The benefits from this latest buy-out could be enormous. Seeking a healthy and balanced lifestyle isn't just a growing phenomenon in Western countries. China is in the midst of a five year fitness plan inaugurated by the Chinese government, which is expected to see Chinese consumers spending US$225 billion on sports, fitness, gym memberships, superfoods and supplements and athleisure clothing by the end of next year.
Chinese firm targets global collagen supplement market
The global collagen supplement market is expected to exceed US$9.37 billion over the next four years. Australian brands such as Vida Glow, The Beauty Chef, Nature's Way and more have built strong and growing sales in Australia to locals and daigous. The Japanese have long been huge fans of collagen powders, liquids and chewables and Shiseido has a huge business in its home market and throughout Asia.
JLand Biotech, a leading Chinese firm, has announced that it has developed an animal-free collagen. Created using yeast fermentation technology, it is similar to the type-3 collagen in human skin. Called Reallagen, the new product has been 10 years in development, and bypasses many of the hurdles limiting the sale of collagen supplements. According to spokesperson, Serene Yuan – "People are looking for animal-free ingredients. Our collagen follows that trend. It's safe for vegans and can be used for halal products".
JLand Biotech launched Reallagen in China about two years ago and claims that it outperforms traditional collagen by 200 per cent. The company has established a sales office in Europe and has had discussions with major multinationals. An export strategy to South Korea, Europe and the US is already in place, with Japan to follow next year.
Snippets for the Wires
- Multinational beauty brands launching travel retail initiatives around the world has become an almost daily occurrence. One of the fastest-growing sectors, global travel retail revenues are expected to climb from US$63.59 billion to US$128.8 billion over the next six years. Beauty and fragrance sales have a total market share of 37 per cent and rising.
- The media spotlight has shifted from BB creams, but sales are still growing strongly, reports Future Market Insights. The market researcher expects global sales to reach US$3 billion by the end of next year and US$5.5 billion by 2027.
- With 800 million visits by consumers every year, Boots is a major port of call for Australian brands looking for access to the UK market. Nude by Nature entered the iconic British retailer this month. The company will refit 25 of its beauty halls across the UK from April and, like Priceline, will introduce 200 brand-agnostic beauty advisors and launch the Glamour Beauty Festival.
- Master perfumer Dominique Ropion has been responsible for several of the blockbuster fragrance hits of the past 20 years – La Vie Est Belle from Lancôme, Viktor & Rolf Flowerbomb, Alien by Theirry Mugler and Calvin Klein Euphoria. The IFF maestro is the recipient of the US Fragrance Foundation's 2019 Lifetime Achievement Perfumer Award. The ceremony will take place on June 5 in New York.
