As an avid sailor, Jean-Paul Agon has learned from weathering past storms to keep an eye trained on the horizon.
It’s a particularly apt lesson for these times. The impressive profit and sales increases of his first two years as chief executive officer of L’Oréal were swept away by one of the worst beauty markets in decades. For 2006, profits jumped 11.9 percent to 1.83 billion euros, or $2.3 billion, on a sales gain of 8.7 percent to 15.79 billion euros, or $19.84 billion. And 2007 was another banner year. Then came 2008, when L’Oréal posted net profits that fell 26.6 percent year-on-year to 1.95 billion euros, or $2.87 billion at average exchange. The company’s full-year revenues came in at 17.54 billion euros, or $25.81 billion, up 2.8 percent. The first quarter of 2009 eked out a 0.3 percent sales gain.
But even as the recession holds its grip and archrival Procter & Gamble continues to challenge L’Oréal’s dominance, the company that helped define the modern beauty era is about to celebrate its centenary. Its 52-year-old ceo, though, is thinking ahead to the next 100 years and what it will take to sustain L’Oréal’s preeminent leadership position.
“We must prepare for what we will become after the end of the crisis, because the crisis won’t last forever,” he says, during a wide-ranging interview in his 10th-floor office in the Paris suburb of Clichy. “The big question is, what should we do in order to get out of the crisis even stronger than when we came in?”
Not only have L’Oréal’s fortunes changed in a relatively short period, but so has the industry around it. “Two years ago, the growth of the cosmetics market worldwide was at a peak, at plus-5 percent,” he says. “Now the business environment has changed completely.”
While declining to give a projection for L’Oréal, Agon ventures an opinion that the cosmetics market “as a whole will stay slightly positive worldwide this year, which would be something good.”
The question of L’Oréal’s position has become an issue of more than academic interest. Press reports have surfaced, quoting data from Euromonitor International, saying P&G has moved ahead of L’Oréal into the number-one position as the world’s largest beauty company. But once the figures are calculated to exclude product categories not traditionally counted as a classic definition of beauty — oral hygiene, bar soap, liquid soap and male and female razors — then L’Oréal remains on top globally, according to Euromonitor data. The consumer tracking firm certifi ed L’Oréal’s 2008 global ranking, with the exclusion of the four personal care categories. For 2008, the study shows L’Oréal with a 12.7 percent global share and P&G ranking second, with 9.4.
In addition, the NPD/IRI Cross Channel Monitor rates L’Oréal number one among corporations across both the prestige and mass channels in the U.S. for calendar-year 2008.
Looking ahead, Agon says he has identified the vital, core elements that drive the L’Oréal model, but there are other dynamics that need to be changed “to reinvent the company.”
His list of fundamental drivers are: L’Oréal’s focus on beauty; its quest for innovation and quality dating back to the founding days of Eugène Schueller; its international roster of brands and all-encompassing global reach; the company’s debt-free financial muscle, and, finally, its multichannel, multilayered worldwide distribution network.
Under the heading of what needs to change, Agon first zeroes in on product innovation. “We have to move more towards what I call ‘accessible innovation,’” he says, “targeting a very broad customer base.”
To that end, Laurent Attal, who has been president and ceo of L’Oréal USA for the last four years, is transferring back to Paris as executive vice president and managing director of research and innovation. He will succeed L’Oréal’s retiring R&D chief, Jean-François Grollier. In addition to spearheading R&D, Attal will oversee the year-old innovation department.
“R&D is more than ever a priority,” Agon says. “We believe in quality, we believe in innovation, and the only way to have an advantage in terms of innovation and quality is to have better R&D. That’s why we have the biggest R&D in the world, the highest ratio in terms of investment and 3,000 scientists.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty