PARIS — Despite a tough economic environment, L’Oréal executives maintain their guidance of 6 percent annual sales growth in like-for-like terms for 2008.
This story first appeared in the September 2, 2008 issue of WWD. Subscribe Today.
“Cosmetics markets are resisting well, and we have good reason to believe they will continue to resist,” said Jean-Paul Agon, L’Oréal’s chief executive officer, during a meeting held Friday for financial analysts in the company’s headquarters in Clichy, a Paris suburb. “I think 2008 will remain a remarkable year for our gain in market share. As far as growth is concerned, we are absolutely determined to go back to a 6 percent growth rate.
“Because of our active launch scheme for the end of the year, all our teams are working hard toward a growth figure that will be higher than that of the first half,” he continued. “This growth, because of the launch timing, should be a lot stronger over the fourth quarter than over the third quarter of 2008.”
Other factors expected to contribute are “the intensification of our optimization efforts and the implementation of more stringent cost procedures,” according to Agon.
As reported, L’Oréal posted net profits for first-half 2008 that increased 6.4 percent versus first-half 2007 to 1.26 billion euros, or $1.92 billion at average exchange. At constant exchange, the French beauty giant’s net income rose 10.1 percent.
L’Oréal registered operating profits up 3.9 percent (and 8.5 percent at constant exchange) in the period to 1.5 billion euros, or $2.29 billion, representing 17.3 percent of sales, a 40 basis-point on-year gain — a company record.
Its revenues were 8.65 billion euros, or $13.23 billion at average exchange, in first-half 2008, a 1.6 percent rise, or a 5.3 percent uptick in like-for-like terms. Excluding currency fluctuations, the sales growth was 7.1 percent.
During the analyst meeting, it was revealed that Renaud de Lesquen is the new general manager of YSL Beauté, which L’Oréal acquired earlier this year from PPR for 1.15 billion euros, or $1.68 billion at current exchange.
De Lesquen, who was formerly international brand president of Giorgio Armani Parfums and Cosmetics, replaces Andrea Barbier in the role. It could not immediately be learned who succeeded de Lesquen at Armani.
YSL Beauté, which includes beauty brands such as Yves Saint Laurent, Roger & Gallet, Boucheron, Stella McCartney, Oscar de la Renta and Ermenegildo Zegna, registered first-half 2008 sales of 299 million euros, or $457.6 million at average exchange in the period, up 3.1 percent versus first-half 2007. It is now part of L’Oréal’s luxury products division.
Speaking generally, Agon noted consumers keep trading up.
“We did not see during this first half a marked trend of trading down on the part of consumers,” he explained. “On the contrary. Whether it is in skin care or makeup or hair care, the trend is more toward trading up.”
L’Oréal’s stock closed down 2.72 percent to 67.91 euros, or $99.51 at current exchange, on the Paris Bourse Friday.