By and  on February 13, 2009

After four sometimes trying years at the helm of L’Oréal’s North American operation, Laurent Attal is being promoted back to the Paris headquarters to take charge of the industry leader’s global research and development effort, plus its year-old innovation department.

Attal will be replaced in New York by Frederic Roze as the new president and chief executive officer of L’Oréal USA.

Attal’s new title will be executive vice president and managing director of research and innovation, succeeding Jean-François Grollier, who is retiring at age 65 after 40 years with L’Oréal. In a telephone interview Saturday, Jean-Paul Agon, ceo of parent L’Oréal, described Grollier as the driving force behind the company’s R&D effort, the largest in the industry accounting for 3.3 to 3.4 percent of sales (last year 17 billion euros) and employing more than 3,000 workers. Grollier had the vision of expanding the scope of beauty research beyond chemistry to include biology and life sciences while building a worldwide network of laboratories and evaluation centers. Agon said that the innovation department, which is charged with “anticipating new trends and working with the labs at an early stage,” was linked to Attal’s R&D portfolio “to accelerate the innovation and make sure the R&D force drives to deliver [it].” Agon added, “we believe this is very important for the company. What sells now is innovation.”

Roze, 47, head of the mass-market Consumer Products Division for Europe, is to arrive in New York in March and succeed Attal by July 1. He joined L’Oréal in 1986 and became managing director of the Consumer Products Division of L’Oréal Russia before being named general manager of Gemey France in 1996.

Later, as managing director of L’Oréal Argentina, Roze is credited with orchestrating the recovery of the business amid a financial crisis. He moved to Spain in 2002 as head of both the Consumer Products and Professional Products Divisions, and boosted market share in many categories, L’Oréal said. Roze became director of the Consumer Products Division for Western Europe in 2004, then his duties were expanded across Europe.

Agon said Attal, 51, was picked to spearhead R&D and innovation, not only because he has a background in science but also for his strategic acumen and leadership abilities.

Attal, was a trained dermatologist and earned an M.B.A. before joining L’Oréal in 1986. He built the company’s Active Cosmetics Division into a worldwide force before moving to New York in 2005 and taking the reins of L’Oréal USA, which generated estimated sales last year of $5 billion.

The year after he arrived in the U.S., the department store world was rocked by the absorption of May Co. into Federated Department Stores Inc., which is now Macy’s Inc. That was followed by a long period of destocking among retailers. In the last year, recession morphed into a financial meltdown and the entire luxury segment took a major body blow.

However, Attal sees his four years in New York as a number of pluses and one long struggle — the crunching of luxury.

Although some securities analysts have sharply criticized L’Oréal for weak quarterly sales results in the last year, exacerbated by what at least one financial house sees as a rollback of advertising, Attal maintains that the North American subsidiary has picked up market share in three of its four divisions — consumer products, professional salon products and the active dermatological division — during the past year. Attal admitted that fourth business, department stores, has been “challenging.” Agon only had praise: “He did a terrific job in a difficult environment during the last four years.”

Attal pointed with pride to the Garnier brands entry into skin care with Nutritioniste in January 2007, which netted L’Oréal five share points into the highly competitive mass skin care market. The Consumer Products Division sailed into the downdraft of recession by ramping up its advertising by 10.9 percent for the fourth quarter. The result was a 2.3 percent increase in sales for the quarter while competitors suffered a 2.2 percent dip, said Joseph Campinell, division president. 

Just weeks ago, David Cragg announced his retirement as L’Oréal Professional Products Division’s president. While criticized by some on Wall Street, Attal was supported by Agon for making what he saw as key acquisitions, namely purchase of three salon distribution operations.  Attal pointed out that the move allowed L’Oréal to do what it does in the rest of the world— sell direct to hair salons in a country that has over 200,000 salons. By acquiring control of distribution for almost 50 percent of its business “we can better control the destiny of our salon business,” he said.

Moreover, he argues, it gives L’Oreal a direct link “allowing us to get closer to our hairdressers,” Attal said. This is particularly necessary in the case of beauty supply stores, which are patronized by booth renters, who comprise a significant slice of the hairdresser population.

He also pointed to a strengthening of the dermo cosmetics business, with the dermatological skin care products being merchandised in their sections of pilot CVS drugstores, amounting to 700 doors in the Northeast and California.

In addition to improvements in the sales effort in the last four years, Attal said he was proud of the modernization of L’Oréal’s systems.

The financial community’s reaction was mixed. “Research and development is very important at L’Oréal, it’s what differentiates the brand, that and its marketing know-how,” said Chicuong Dong, an analyst at Richelieu Finance in Paris. “We could also read into the news that there’s a desire to bring fresh blood to the U.S., which has been a difficult market. It’s too early to tell. We’ll know more at the conference on Tuesday.” The analyst was referring to L’Oréal’s financial analysis meeting.

Dan Dolev, associate European HPC analyst of Sanford C. Bernstein & Co. LLC said, “North America has clearly been a problem business for L’Oréal for some time…so this move suggests that senior management is shaking things up.”

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