L'Oréal buys IT Cosmetics for $US1.2 billion, Coty appoints new CEO for P&G integration, Goldman Sachs and Bain Capital to acquire controlling stake in Carver Korea, and Aussies very satisfied with major pharmacy groups.
L'Oréal buys IT Cosmetics for $US1.2 billion
Over the past month L'Oréal has bought Atelier Cologne and the license for Saint-Gervais Mont Blanc skincare, expanding its presence in haute parfumerie and dermo-cosmetics. The French giant is also charting new territory through its US$1.2 billion buyout of IT Cosmetics. Not only will the problem-solving brand complement the more on-trend Urban Decay lineup, IT Cosmetics opens up the world of direct-selling to L'Oréal because of its soaring sales on the QVC home shopping network in the US.
IT Cosmetics is sold in Sephora stores in Australia and every Ulta store and 100 Sephora stores in the US. In 2015, the eight year old company founded by Jamie Kern Lima, a former TV news anchor, reported sales of $US182 million. A 56 per cent uplift in sales in 2016 will lift revenues to $US400 million by year's end, say analysts. The brand makes more than 300 beauty products, including make-up, brushes, tool and skincare, many with an emphasis on camouflaging major concerns such as rosacea and hyper-pigmentation
L'Oréal isn't the first major player to come calling. Private equity firm TSG Consumer Partners acquired a minority stake in IT Cosmetics in 2012, and so did Guthy-Renker a year later. The L'Oréal deal will return 25 times TSG's original investment alone.
IT Cosmetics will join L'Oréal's Luxe division. Lima and husband Paolo will continue to be involved in the brand and its New Jersey base will also be retained. Says Lima: "The biggest thing that I am most excited about is utilising L'Oréal's global infrastructure to really take our mission to a whole new level so much quicker and so much bigger than we can do on our own."
Coty appoints new CEO for P&G integration
The finalisation of Coty's acquisition of P&G's speciality beauty business - a grand total of 43 brands - takes place over the next few months. Chairman Bart Becht assumed the mantle of interim CEO to hammer out the details. But he will step aside for Camillo Pane, who will become the multinational's CEO in October to oversee the post-merger integration.
Pane was appointed Coty's chief growth and digital officer last November. Previously, he spent 20 years at Reckitt Benckiser (RB). As head of the multinational's global health and personal care business, he played a crucial role in turning it into RB's fastest-growing division. Another plus for Coty's continued global expansion is Pane's international experience working in Italy, the US, the UK and Brazil.
Before moving to the CEO's office, Pane will focus his attention on revenue growth. According to Becht, who will remain Chairman of Coty, Pane is "a strong leader with an intense drive and passion to make Coty the new global challenger in beauty for the benefit of consumers and shareholder growth."
Goldman Sachs and Bain Capital to acquire controlling stake in Carver Korea
The K-Beauty boom is fast becoming more than a current fashion trend. Last week LVMH bought a minority stake in South Korean beauty brand, Clio Cosmetics, to springboard its global expansion. Clio products are sold through the luxury goods group's Sephora chain and its own Clio Club stores - with 55 per cent of sales coming from South Korea, 35 per cent from China and 10 per cent from the rest of the world. LVMH will not only propel Clio sales in China, the brand's core export focus, but also in the US and Europe. The deal valued Clio at $US700 million and an IPO is planned for the end of the year.
Financial heavyweights Goldman Sachs and Bain Capital have also dipped their toes into the Korean beauty market with the acquisition of a controlling stake in Carver Korea. The details of the buyout were not disclosed, but the stake has been valued at $US675 million. Carver, established in 1999, has a clutch of fashion, make-up and skincare brands, including A.H.C, Vivito and Shara Shara. The company's sales jumped 200 per cent in 2015 through stores, duty-free outlets, salons, clinics online and home shopping networks. Both private equity firms see huge potential for local and international growth for their latest investment.
Aussies very satisfied with major pharmacy groups
Over 50 per cent of the population - 10.5 million - make at least one purchase at a pharmacy every month, reveals Roy Morgan Research. According to the market researcher, the vast majority leave with smiles on their faces. It's easy to trace the cause, says Norman Morris, industry communications director, Roy Morgan Research. "Pharmacists are considered one of the most trustworthy professions in Australia. So it's fair to say that many consumers would already be positively disposed towards their chemist before making a purchase."
A perception that is matched by reality, and great news for beauty, fragrance and skincare brands with major sales in pharmacies. Four major groups achieved scores in excess of 90 per cent for customer satisfaction - Soul Pattinson (92 per cent), Guardian Pharmacy (91 per cent), My Chemist and Chemist Warehouse (both 90 per cent). The next four groups were a whisker away from these outstanding results - Amcal/Amcal Max and Priceline (both 89 per cent), Terry White (88 per cent), Discount Drug Stores (87 per cent) and Chemmart (84 per cent).
Over 60 per cent of customer traffic is aged 50-plus at Soul Pattinson and Guardian, which could explain their higher ratings, says Roy Morgan. Discount Drug Stores, with a younger customer base, scored best with Millennials - the 25 to 34 year age group - at 91 per cent. My Chemist recorded its highest satisfaction level with Gen Xers - 35 to 49 year olds - at 95 per cent.
Snippets from the wires
- Donna Karan sent shockwaves through the fashion and beauty industries last year when she exited her namesake label. LVMH, who acquired the Donna Karan trademarks in 2000 for $US450 million, is also heading for the corporate door. The world's largest luxury goods group is on the scout for an American buyer, rather than put the Donna Karan and DKNY brands on the block.
- The tide has turned at Revlon.The company has reported sales growth of 1.3 per cent in the second quarter to push half year sales to $US929 million. The spike was strongly driven by Revlon's recently launched mascara collection, Ultra HD Matte lip colour and the Kylie Sinful Shine nail collection. and Mitchum deodorants also performed well.
- Salicylic acid and benzoyl peroxide are the hero actives of anti-acne treatments. With blemishes plaguing people of all ages well past the teenage years, the global market for salicylic acid alone is expected to reach $US426 million by 2020. Ingredients manufacturer, Alban Muller, has released the first 100 per cent natural salicylic acid molecule - Amiperfect ER. In addition to fighting pimples, it also has an anti-wrinkle effect. A great benefit for those who suffer from acne in their 30s and 40s
- It's widely known that real estate is the biggest asset of the McDonald's empire, not burgers. Inditex, the owner of Zara, has also acquired major chunks of prime retail space in its worldwide expansion. Amancio Ortega, founder of Zara and Europe's richest man, has bought more than $US6.6 billion of global retail estate from London to New York through his investment arm, Pontegadea Immobiliaria.
- Australian retail assets are on fire, reports Savills Australia. Investors forked out $10 billion on retail assets nationwide in the financial year 2015/2016. It was a close race between Sydney ($2.9 billion), Melbourne ($2.77 billion) and Brisbane ($2.71 billion) for investment dollars. Foreign investors led the enthusiastic pack (27 per cent), followed by private investors (24.7 per cent), trusts (18.3 per cent) and funds (12.4 per cent).
