Expansion plans - new CEOs for StriVectin and REN, L'Oréal's unbranded editorial website proves a winner, Avon to relocate headquarters to UK, and Ulta Beauty set for ambitious growth.
Expansion plans - new CEOs for StriVectin and REN
In January, Catterton Partners, one of the leading consumer-based equity firms in the US, merged with LVMH, the world's largest luxury goods group, to form a new investment giant called L Catterton. Back in 2009, as Catterton Partners, the company bought , the indie prestige skincare brand. There was talk of a sell-off in 2012, but Catterton decided to hold off because of the possibility of achieving a higher price at a later date.
Joan Malloy has been appointed as the new CEO of StriVectin, tasked with growing the brand across all aspects of the business from R&D through retail partnerships. She certainly has the runs on the board, following a string of senior executive positions at Frederic Fekkai, John Frieda, Lancôme and .
Most recently, Malloy was the CEO and President of Alterna, noted for its anti-ageing hair care products. Her extensive experience in the hair care industry underlines StriVectin's commitment to its new hair collections - Ultimate Restore, Max Volume and Color Care - which launched in the US in January. Billed as a breakthrough range of hair care solutions a decade in the making, each range contains StriVectin's patented NIA-114 anti-ageing technology.
Last year, Unilever went on a major corporate shopping spree, acquiring the REN, Dr Murad, Dermalogica and Kate Somerville brands to form a standalone prestige beauty division. Combined sales for the quartet of noted names total US$432 million. But Unilever wants personal care and beauty brands, including and , to make up half of its total sales within the next few years - up from 38 per cent in 2015. The multinational has appointed cosmetic industry veteran, Olivier Ricard, formerly Director of International Relations for as the new CEO of REN. He also has extensive experience in Asia and has worked for L'Oréal.
L'Oréal's unbranded editorial website proves a winner
With an increasing number of publishers worldwide launching dedicated beauty and fashion sites, other media companies aren't the only competitors. Unbranded editorial sites which bypass the hard sell are becoming a popular way to engage consumers. LVMH, ASOS, Aesop and L'Oréal are just a few brands and companies offering neutral, editorial-style magazines and websites which don't focus on core company products or associated brands.
Products launched Fab Beauty (fab-beauty.com) in mid-2015. Boasting a global audience in 150 countries, there's no obvious branding or e-commerce options and the site features products from rival companies. Beauty isn't the only subject, the editorial also covers fashion and design.
According to An Verhulst-Santos, President of L'Oréal Professional Products: "We've always said our job is to launch brands and products, but also to promote and endorse the industry of beauty. For Fab, success is about having curated content that gradually brings in the audience and gets positive feedback. This is about neutrality, experience, and craft, not about a product destination - we have other places to do that." The strategy is proving a winner. Fab Beauty has a bounce rate of less than 25 per cent, in contrast to an industry standard of 40 to 70 per cent, and viewers spend an average of two to three minutes per article.
Avon to relocate headquarters to UK
Maybe it's fate. Avon does share its moniker with the river near Shakespeare's birthplace. But the most iconic of US beauty brands caused a major stir late last week by announcing it is planning to relocate the company's headquarters to the UK. A move sparked by the conclusion of the deal with Cerberus Capital Management, the private investment firm with US$29 billion under management, to split off Avon's North American business.
The direct-selling giant announced a three-year cost-cutting program in January. In a bid to save up to US$70 million by next year, a major part of the strategy involves cutting 2500 jobs "across multiple geographies." Avon has not given a timeframe for the shift across the Atlantic, or named the prospective location of its new British HQ. The company will continue to trade on the New York Stock Exchange and retain its US facilities in Suffern and Rye.
"With the recent completion of the sale of the North American business, our commercial operations are now fully outside the United States, allowing us to dramatically rethink our operating model," says Sheri McCoy, CEO of . "The actions we are taking today will bring our corporate and commercial businesses closer together, which will drive efficiencies, improve operational effectiveness and deliver significant cost savings."
Ulta Beauty set for ambitious growth
Ulta Beauty has been vocal about its plans to curb the growth of Sephora in the US. With good reason. Full year sales for the beauty chain climbed 21.1 per cent to US$3.924 billion, as revenues in the fourth quarter soared to US$1.268 billion.
Scoring a Bull of the Day rating from analysts Zacks.com, the largest US beauty retailer (stocking 20,000 products from 500 brands) is expecting another stellar year in 2016. The company has announced major plans for the year to expand its square footage by 11 per cent. Translation: about 100 new stores to increase its nationwide US network to 1000 stores. By contrast, Sephora has 360 standalone stores and 485 concessions in JC Penney department stores.
"Our fourth quarter results capped an exceptional year during which we made significant progress," says CEO Mary Dillon. Net income for 2015 was up 24.5 per cent to US$320 million. Ulta Beauty also plans to grow e-commerce sales by 40 per cent, and total sales by double digits by year's end.
Snippets from the wires
- Jean-Paul Agon, CEO of L'Oréal for the past decade, has taken the world's largest beauty company to new heights. Last week, he received a 2016 Women's Empowerment Principles CEO Leadership Award at UN Headquarters in New York for his role in empowering women in the workplace, marketplace and community.
- Every little bit counts, but environmentally-friendly programs from the major personal care giants have the biggest impact. Unilever has signed a five year deal worth US$200 million with biotech company Solazyme to supply renewable algae oil for its personal care products.
- South Korea has a way to go to catch up with France when it comes to beauty exports. Total export revenues for the French cosmetic industry rose 4.4 per cent in 2015 to 11.8 billion euros (AUD$17.47 billion). Skincare led the pack, accounting for 42.5 per cent of all French cosmetic exports.
- Respect for magazines is on the uptick, says Stephen Colvin, CEO of the Robb Report, the high-end glossy which targets the wealthy. The magazine will launch a German edition in October to add to its 14 other international editions. "The whole idea that print is dying, that's total nonsense", he says. "Print plays an important role in media."
