Laura Mercier and ReVive Skincare on the block, luxe, active and e-commerce push L'Oréal to double digit growth, Estée Lauder raises forecast for 2016, and the at-home beauty device market to double.
Laura Mercier and ReVive Skincare on the block
Moelis & Company, the American multinational investment bank with offices in Australia, has been tasked with finding a buyer for the and ReVive Skincare brands. In 2006, Alticor, the US$6.4 billion multinational which owns Amway, bought Gurwitch Products. Founder Janet Gurwitch helped to create the Laura Mercier brand in 1996 and was a former executive at Neiman Marcus. Three years after the upscale brand's debut launch, the Texas-based luxury retailer acquired a majority 51 per cent stake in the company.
Laura Mercier's global sales at the time of the sale totalled US$125 million and the brand was available in more than 400 stores in 24 countries. Alticor's aim was similar to Unilever's shopping spree of last year - to expand into the luxury cosmetic market. In 2008, the company also bought ReVive Skincare and its research unit, Bays Brown Laboratories.
Both brands were operated as standalone businesses but Alticor also hoped to benefit from their expertise and R&D in its core beauty and skincare franchises, notably the premium Artistry brand. A lot has changed in 10 years. Billed as the only direct seller of prestige makeup and skincare, Artistry has enjoyed explosive success in Asia, especially in China, Japan and Korea. An Asia Innovation Center was set up in 2013 and a complete luxury packaging "renovation" was rolled out last year.
Private equity firms and strategic buyers within the beauty industry are expected to be leading bidders in the up-coming sell-off.
Luxe, active and e-commerce push L'Oréal to double digit growth
Other beauty giants are posting fluctuating results but the world's largest cosmetic company continues to beat the estimates of leading analysts. Full year global sales for 2015 surged 12.1 per cent to 25.26 billion euros (AUD$39.98 billion). Every major region enjoyed an upswing, led by Eastern Europe and Asia-Pacific.
Higher demand for prestige beauty worldwide lifted sales of the L'Oréal Luxe division by 6.1 per cent. Major launches from Yves Saint Laurent Volupte Tint-In-Oil lip colour through Lancôme Miracle Cushion foundation and Giorgio Armani Profumo men's fragrance reinforced the continuing strength of global bestsellers such as Armani Si women's fragrance and Lancome's Genifique skincare franchise. and Urban Decay also grew faster than the global average for prestige brands.
But the Active Cosmetics division was the star performer - surging 7.8 per cent last year. The Vichy skincare brand saw the biggest uptick in sales, followed by La Roche-Posay, SkinCeuticals and Roger & Gallet. The Consumer Products division experienced a more modest 2.5 per cent sales increase from a much larger base, of course. In 2015, L'Oreal Paris was ranked as the number one most valuable beauty brand in the world and Garnier took out the number 8 slot in the annual BrandFinance survey. Colour cosmetics led the way, with the standout performers including Maybelline New York in the US, NYX Professional Makeup and Extraordinary Oil from Garnier.
North America and Western Europe boosted the showing of L'Oréal's professional haircare brands. Key successes included the Frizz Dismiss and Extreme hair strengthening ranges, Chronologiste and Resistance Therapiste from Kerastase and Serioxyl and Pro Fiber from .
E-commerce may only account for 5 per cent of L'Oréal's global turnover but online sales grew to 1.3 billion euros (AUD$2.05 billion) last year and are rising fast. Higher revenues than many well-known global makeup and skincare brands which is why L'Oréal are continuing to invest heavily in the sector.
Estée Lauder raises forecast for 2016
Many luxury fashion and beauty companies are watching the ups and downs of the Chinese market like hawks. But a boom in e-commerce sales in China has fast-tracked the Estée Lauder Companies (ELC) to reach online sales of more than US$1 billion by the end of this year. Online sales for Cyber Monday in the US increased by more than 50 per cent in 2015 says President and CEO Fabrizio Freda. "On Singles Day in China, sales over five flagship sites on Tmall more than doubled, led by Estée Lauder and ."
There was more good news for the second quarter of fiscal 2016 with ELC's net sales up 3 per cent to US$3.12 billion. Colour cosmetics were on a roll with sales rising 6.4 per cent to US$1.25 billion. Buoyed by its latest results, the multinational raised its full year forecast, predicting sales growth of 7 to 8 per cent for the financial year ending June 30th.
The uplift wasn't all about China. Net sales in the Europe, Middle East and Africa (EMEA) region climbed 13 per cent with double digit growth in every major market. Douglas, Europe's largest perfumery chain, which accounts for over 33 per cent of Estée Lauder's business in Germany, experienced double digit growth in the second quarter. In the UK, Boots provided a strong springboard for the Smashbox and Bumble and bumble brands. Continued expansion in Europe will be driven by travel retail, e-commerce and freestanding stores in key markets notes Freda.
At-home beauty device market to double
Clarisonic is primed to launch the Alpha Fit in Australia, its first sonic cleanser targeted at men. Since launching in 2004, the L'Oréal-owned brand has sold more than 10 million models in the US alone. According to co-founder and president, Dr Robb Akridge, the global beauty device market is set to double by 2020.
Cleansing brushes still lead the category. One of the major reasons behind the dominance, reports NPD, is because people keep using them regularly after purchase. Seventy per cent of consumers who own cleansing and facial massage devices continue to use them more than once a week. Satisfaction levels are even higher, with 80 per cent of users saying that they are extremely or very satisfied with their purchases.
Emerging categories for beauty devices include makeup application says Eric Jimenez, co-founder of Color Me, New York, which makes multi-benefit devices that take the place of foundation, powder, blending and contouring brushes. LED lights, already a hit for reducing the appearance of wrinkles, will increasingly be used for anti-pigmentation and other skin concerns he notes.
Mass retailer Target is on track to be a real gamechanger and is already working on LED light and sonic technologies to produce at-home devices with more affordable price points. Unilever's joint venture with Syneron Medical and Johnson & Johnson's US$20 million investment in La Lumiere's IlluMask are also set to revolutionise the category with more affordable prices. Costing only US$30, the IlluMask, which looks like the hockey mask Jason wears in the Friday the 13th movies, has sold millions of its two models - anti-acne and anti-ageing - through Walmart and Target stores in the US.
Snippets from the wires
- Vampire facials are passe for Academy Awards nominees. Vampire breast lifts headline the contents of this year's Oscars goody bags worth US$200,000. Other treats include a year's worth of Audi car rentals, a walking tour of Japan, a trip to Israel, personal training sessions, under arm sweat patches and a "wearable" sex toy.
- Magazine sales were also down in the UK for the second half of 2015. The big exception was the UK edition of Cosmopolitan which increased its circulation by 57.8 per cent to 405, 308 following a revamp. Glamour, Look and Marie Claire suffered double digit losses. Circs at British Vogue, Harper's Bazaar, Good Housekeeping and GQ declined in single digits of between 1.3 and 4.1 per cent.
- US prestige beauty sales topped US$16 billion last year - up 7 per cent on 2014 - reports NPD. Make-up sales surged 13 per cent, fragrance was up 4 per cent and skincare by 3 per cent. Mass brand sales grew by 2 per cent as skincare and fragrance sales dipped.
- Jessica Alba's Honest Company may have sparked controversy in the beginning but the 80 SKU range will launch in 250 Ulta stores in the US and on the retailer's website. New products will be added as the year progresses to enhance the brand's first nationwide launch in the US.
- , now owned by L'Oréal, is celebrating its 40th anniversary this year. A pioneer of sustainable and environmental initiatives in the beauty industry, the chain has announced a new Enrich Not Exploit strategy to become "the world's most ethical and sustainable business". Fourteen goals have been set, including doubling the company's community trade program and ensuring the use of 100 per cent natural ingredients.
