WWD.com/beauty-industry-news/retailing/beauty-beat-e-leclerc-lashes-out-over-product-pricing-beiersdorf-profits-slip-470231/
government-trade
government-trade

Beauty Beat: E. Leclerc Lashes Out Over Product Pricing… Beiersdorf Profits Slip

France's E. Leclerc supermarket chain has publicly threatened to withdraw six products, including items by cosmetics giants L'Or?al and Beiersdorf, from its...

PARIS — France’s E. Leclerc supermarket chain has publicly threatened to withdraw six products, including items by cosmetics giants L’Oréal and Beiersdorf, from its shelves on Feb. 1 if manufacturers don’t reduce their prices.

This story first appeared in the January 17, 2008 issue of WWD.  Subscribe Today.

The retailer, which built its business on promising low prices, took out full-page advertisements in daily newspapers here Wednesday, including Libération and Le Figaro, denouncing alleged price increases of 18 to 20 percent since August.

“Products too pricy?” reads the ad, in translation. “We only have one solution left: to no longer sell them. Shame!”

Under that message is a picture of the six products at issue and the percentage by which their prices were supposedly upped in the four months between August and January. Among them is L’Oréal Paris Men Expert Hydra Energetic Soins Hydratant Yeux Anti-Cernes eye cream, at plus 18.5 percent, and Beiersdorf’s Nivea DNAge Renovateur Cellulaire day cream, at plus 18.4 percent. Other products include Laughing Cow cheese and an Ajax cleanser. Across the products are printed the words, reading in translation: “Pulled from shelves.”

Also in the ad, Leclerc declares such hikes are not attributable to the rising costs of raw materials alone. Further, Leclerc blames French legislation for hampering competition by preventing retailers from deciding on pricing. (In France, laws disallow retailers to sell products below manufacturers’ listed prices.) While Leclerc’s chief executive, Michel-Edouard Leclerc, has long battled against the legislation, public threatening by the retailer to boycott products is a new tactic, which comes when concerns about purchasing power run high among French consumers.

“It’s the first time we have seen this [type of campaign],” said René van Duijnhoven, Beiersdorf France’s general manager. The company rejected Leclerc’s accusation, calling the retailer’s ad campaign deceptive.

“It gives the impression that we have increased the price to the consumer that amount, and that is not the case,” continued van Duijnhoven, adding the percentage quoted in the ad is the tariff set by Beiersdorf before rebates are negotiated with retailers during yearly meetings on pricing.

“Since we have not yet negotiated the rebate for 2008, it is absolutely misleading information,” said van Duijnhoven.

L’Oréal would not comment on Leclerc’s ad Wednesday.
— Ellen Groves

Beiersdorf Profits Slip

BERLIN — Beiersdorf continued to grow sales and — with the exception of supply chain realignment costs — profits last year, lightly outpacing its own expectations for 2007, its 125th year of business.

The group’s net profits were affected by the supply chain realignment, which amounted to 70 million euros, or $96 million at average exchange, before taxes in 2007. Net profits hit 442 million euros, or $605.9 million, down from 668 million euros, or $915.7 million, in 2006, according to preliminary figures for 2007 the firm released Tuesday. Without the special supply chain costs, however, net profits were 488 million euros, or $668.9 million, up from 387 million euros, or $530.5 million, the year before.

Including special effects, earnings before interest and taxes surged 28.5 percent to 613 million euros, or $840.3 million, from 477 million euros, or $653.8 million, in the prior year. Without the special effects, EBIT reached 683 million euros, or $936.2 million, a gain of 14.4 percent.

Group sales rose a nominal 7.6 percent to 5.51 billion euros, or $7.55 billion, a 9.1 percent increase on a currency-adjusted basis.

Sales of the consumer division, which includes body and facial care under the Nivea, Labello, Florena, Juvena, La Prairie, Eucerin and other brands, as well as Curad and Curitas plasters, increased a nominal 7.7 percent to 4.66 billion euros, or $6.39 billion. Currency-adjusted sales in the division were up 9.3 percent and EBIT without special effects grew 13.5 percent to 595 million euros, or $815.6 million.

Beiersdorf said growth regions like Eastern Europe, Latin America and Africa, Asia and Australia all generated double-digit gains. Final figures are slated to be released Feb. 28.
— Melissa Drier