WWD.com/beauty-industry-news/retailing/sephora-to-close-2014-with-24-latin-american-stores-7786559/

MEXICO CITY — French perfumery chain Sephora hopes to close this year with two dozen stores in Latin America, where it continues to pin its fortunes on the fast-growing economies of Mexico and Brazil.

“We hope to finish the year with 10 stores in Mexico and 14 in Brazil, to have 24 in the region,” the brand’s vice president for Latin America Paula Larroque told WWD. “We will continue to focus our expansion in Mexico and Brazil, where we have a lot of potential and where we are very happy.”

Next week, the LVMH Moët Hennessy Louis Vuitton-owned franchise will open its 13th Brazilian perfumery in Rio de Janeiro’s Barra Shopping mall. Sephora will then cap the foray with another door in São Paulo’s high-end Alphaville mall in November.

The upmarket beauty chain rolled out two shops — one in São Paulo and a first in Brazilian capital Brasilia — in late May, perhaps timed to benefit from the World Cup’s tourism flood.

“We thought the World Cup would be strange and different than the normal [summer season sales] tendency, but our stores are doing very well and many of our locations have benefited from high tourism.”

In Mexico, where the brand made a splashy arrival in 2011, Sephora recently inaugurated its ninth shop in the luxury Antea Hall in Queretaro, a booming metropolis north of Mexico City. In November, it will install its 10th shop in Mexico City’s fledgling Parque Toreo.

In 2015, Sephora intends to grow at a similar pace to this year by installing at least seven locations between Mexico and Brazil, Latin America’s two largest economies, Larroque said.

Her comments came as Sephora this spring clinched the remaining 49 percent stake of a joint venture to operate its Mexican stores with franchiser Grupo Axo. The move stemmed from the company’s decision to take full ownership of its highly profitable Mexican franchise.

Larroque would not comment on the move. However, a Sephora insider said: “We had a 51 percent stake in the venture with Axo and we made a strategic decision to simply buy the rest to have 100 percent. We are making a big bet on our Mexican business, where we see a lot of opportunity.”

Not to stay behind, Grupo Axo, which runs international apparel and beauty brands in Mexico, is rushing to expand Victoria’s Secret Beauty & Accessories with plans to open as many as 15 shops this year, according to corporate vice president Carlos Miranda.

Miranda declined to comment on the Sephora fallout, other than to say, “They bought the business back from us to consolidate their Latin American presence.”

Market observers pointed out, however, that the move seemed timed to avoid conflicts of interest as Axo would have ended up operating two fiercely competitive perfumery chains in a highly coveted market.
VSBA spokespeople would not comment or provide guidance on the company’s Mexican and Latin American expansion plans.

Nevertheless, the two firms will compete head-to-head in some markets as VSBA hopes to operate locations in the Antea Hall and in Parque Toreo during the first half of the year. Other plans will take it to Culiacan and Veracruz in the Mexican Gulf.