Blemish-Free L’Oréal Eyes 19th Year of Double-Digit Net Growth

L’Oréal said it is on track to post double-digit profit gains for 2003, as it reported that first-quarter sales on a like-for-like basis rose...

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A case in point is Vichy, which is known as Dr. Vichy in China. There, the products have been launched in just 350 of the country’s 400,000 pharmacies, said Laurent Attal, managing director of L’Oréal’s active cosmetics division and a member of the group’s executive committee.

"Over a long period, we have gradually selected, clarified and consolidated our brand portfolio," continued Owen-Jones. "Not all the brands have been introduced in all countries, but all of them could be introduced without changing their positioning or distribution channel."

When it comes to the situation in Iraq, Owen-Jones said it is having little effect on L’Oréal’s overall business. "Cosmetic products are less sensitive than others to economic cycles," he said, adding that the geopolitical climate is proving difficult for the luxury goods sector.

"Some countries are more affected than others," explained Gilles Weil, president of L’Oréal’s luxury goods division. "There are fewer people shopping in U.S. department stores, but paradoxically, our launches are successful [there]."

Weil noted that travel-retail stores have been particularly hard hit because of the war.

He also cited numerous successful launches in L’Oréal’s luxury division last year. For instance, Parfums Giorgio Armani rang up 17.6 percent growth year-on-year. The brand’s sales, which have topped the $429 million mark, were buoyed by the launches of Armani Mania and Sensi in 2002. Weil also noted the introductions of Biotherm’s Skin Loving Colors makeup line and Ralph Lauren’s Polo Blue.

In terms of possible acquisition targets, Owen-Jones was tight-lipped on the subject of speculation that L’Oréal is interested in acquiring Beiersdorf.

Owen-Jones also refused to speak at length about Procter & Gamble’s recent acquisition of Wella. However, he did add the deal "doesn’t change any of our ambitions. In our business, competition generates growth."

Looking ahead, Owen-Jones said he is confident in the beauty industry’s growth, noting it will benefit from increased spending by aging Baby Boomers. He estimated that by 2015, 80 percent of women will use skin cream. He added the growth in the men’s segment will likely continue, saying that in 1990, only 4 percent of men said they used a skin cream; in 2002, 21 percent, while in 2015, 50 percent are expected to do so.
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