PARIS — At L’Oréal’s annual general meeting on Thursday, chairman and chief executive officer Jean-Paul Agon fielded tough questions from shareholders about The Body Shop, which has failed to grow in line with targets since its 2006 acquisition.
“It is true that the integration has not been successful. We were scared that the company culture was so different, and we didn’t want to destroy its value,” Agon acknowledged, adding L’Oréal therefore chose to operate the activity separately from its four core divisions.
He explained L’Oréal aims to turn around The Body Shop’s ongoing lackluster performance through its recent integration into the company’s Selective Divisions portfolio, created last year, and by changing the operation’s management team.
In 2013, The Body Shop’s sales fell 2.3 percent to 835.8 million euros, or $1.15 billion at average exchange for the period, while its operating profitability declined by 50 basis points to 8.6 percent.
Also at the meeting, L’Oréal’s shareholders unanimously approved the acquisition of 48.5 million of its own shares from Nestlé and the sale of its 50 percent stake in Galderma to the Swiss firm.
The transaction will see Nestlé reduce its stake in L’Oréal to 23.29 percent of the share capital, from 29.4 percent, and increase the share held by the Bettencourt Meyers family to 33.31 percent from 30.6 percent. The operation was first announced in February.
It was one of a number of resolutions presented at the meeting.
L’Oréal shareholders also voted to extend Agon’s mandate as administrator of the company for a further four years.
In addition, they accepted the nomination of Belén Garijo, president and ceo of pharmaceutical firm Merck Serono, as an external administrator, bringing the number of women on L’Oréal’s advisory board to five out of 14.
As for L’Oréal’s ongoing target of attracting one billion new consumers in the 2020 to 2025 time frame, Agon said expansion efforts in emerging markets, notably through acquisitions, were helping it to move toward the goal.
Recent acquisitions such as Interbeauty in Kenya, Vogue in Colombia and Magic Holdings in China “bring us tens of millions of new consumers each year,” said Agon.