PARIS — A page in L’Oréal’s history started turning during the group’s financial analyst meeting transmitted Friday morning from company headquarters in the Paris suburbs of Clichy.
Jean-Paul Agon, L’Oréal chairman and chief executive officer, presided over the virtual conference, seated in between Christophe Babule, executive vice president and group chief financial officer, and Nicolas Hieronimus, deputy CEO in charge of divisions.
The gathering focused not just on discussions about L’Oréal’s strong 2020 results, released the prior evening after the close of the Paris bourse, but also on the upcoming CEO succession.
As previously reported, Hieronimus is to become L’Oréal’s CEO on May 1, after which time Agon will remain as chairman.
During the meeting Friday, Agon gave an overview of how the company is beginning the year, while Hieronimus shared his vision of L’Oréal’s future.
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Agon said that paradoxically, despite the challenging beauty market — which overall posted sales down an estimated 8 percent in 2020, due to the coronavirus pandemic — L’Oréal is starting 2021 stronger than ever for various reasons.
“First, our relationships with our partners are closer than ever,” he said. “We solidified trust and proximity, and multiplied goodwill with hairdressers, retailers and suppliers through our solidarity during the crisis.
“Second, our market-share gains are stronger than ever,” continued Agon.
Number three is L’Oréal’s increased leadership in China.
“Our winning strategy places us in the best position on this market, which will soon become the biggest beauty market worldwide,” said Agon.
He said that L’Oréal’s digital prowess gives it an edge.
“We are now a digital-first company that is making beauty more connected, more social and more conversational than before,” explained Agon.
Then there’s L’Oréal’s e-commerce leadership. With a 62 percent like-for-like on-year increase, the group’s sales online grew 1.5-times faster than the market, reaching 27 percent of total company revenues.
“This impressive surge was seen across all categories, all divisions and all regions,” said Agon. “E-commerce is now the first country for L’Oréal, and we have for the first time ever two e-billionaire brands, as L’Oréal Paris and Lancôme each surpassed 1 billion euros in e-commerce sales.”
He underlined the group’s leadership in skin care — now generating 40 percent of its overall business — as being more pivotal than before.
Agon further highlighted how the appointment of Barbara Lavernos as the group’s new head of research, innovation and technology, and soon to become deputy CEO, confirmed R&I’s crucial role in the company.
He said L’Oréal’s sustainability and responsibility effort is ever more exemplary, pointing to its ambitious new sustainability commitments for the next decade, called L’Oréal for the Future.
“Our organization is more agile and teams more empowered than ever,” he continued, adding the company has been improving gross margin, as well.
“As I prepare to pass the baton, I am thrilled to see the strength of our unique business model that has proven both its effectiveness and ability to develop our leadership and create value in usual times and its capacity to resist exceptionally well, in terms of market share and profitability in times of crisis,” he said. “I am totally confident, because this business model is perfectly suited for the world of tomorrow, as L’Oréal has anticipated all fundamental shifts to win in the 21st century.
“Our group is now ready to make miracles under the leadership of a new captain,” said Agon, who added he is “extremely happy and serene” to be handing the helm to Hieronimus.
“I have full confidence in him,” said Agon. “Nicolas and I have known each other for 30 years and trust each other completely.”
Hieronimus, he said, has played a key role by Agon’s side as deputy CEO.
“I have the deepest conviction that he is the best to lead our beautiful company in the years to come,” said Agon. “He will drive L’Oréal to new heights in full continuity of our strategy and values, while also reinventing the group and adapting it to the major challenges of our future world.”
For his part, Hieronimus shared his vision for L’Oréal, which he shaped around the words: continuity, confidence and ambition.
“Continuity” applies to the CEO transition. Hieronimus said he and Agon have built up a close relationship and partnership over the past eight years.
Hieronimus explained that in his roles as head of L’Oréal’s selective divisions and deputy CEO, he’s been involved in each of the group’s transformational decisions.
“This transition could not have been better prepared,” said Hieronimus. “We make an efficient duo, and our relationship will continue to evolve on different terms, but in the same spirit of proximity.
“I have a lot of confidence for the future, which relies on the one hand on the power of the L’Oréal model,” he added. “And on the other hand, on the potential of the beauty market.
“I’m extremely confident in the resilience and the power of the unique L’Oréal model, a model that ensured our performance in 2019, our best in 15 years on a dynamic market, but also in 2020 with a very solid result in the middle of the biggest global storm of the last 75 years,” said Hieronimus. “[It’s a] model that has been constantly evolving over the years in a permanent revolution whilst remaining true to its roots.”
The executive said he’s extremely confident about the beauty market’s resilience and long-term potential, and shared his vision for L’Oréal over the next decade.
“Top-line growth and beating the market will always be my priorities,” said Hieronimus. “This top-line growth and virtuous P&L management will allow [for delivery of] regular increases in profitability.”
He explained L’Oréal’s first priority has always been to beat the market. There remains a lot of market share to be had. Even as the largest beauty maker, the group’s market share still is only around 13 percent globally.
“The regional differences also show true potential,” said Hieronimus, citing as an example Asia, where L’Oréal has 11 percent market share, and Western Europe, where it ranges from 16 percent to 30 percent.
“My three regional priorities will be pursing the Chinese momentum, boosting growth in the U.S.A. and accelerating in the emerging markets, where the rapid digitalization and the rise of e-commerce will give us easier access to this pool of aspiring consumers,” he said.
Product category-wise, Hieronimus’ first priority will be skin care.
“It is the biggest and most dynamic beauty category, at the crossroads of all trends, a high added-value category, driven by science and performance, where our R&I gives us the upper hand, as proven this year,” he said.
“We will grow valorized hair care and color, both in the professional and mass worlds,” continued Hieronimus. “Our global leadership in fragrance puts us in the best position to benefit from these categories’ acceleration in China.”
He is confident and ambitious about makeup, too, calling it the most cyclical category, down now but due to rebound.
“And we will lead it,” said Hieronimus. “The third driver of my ambition is e-commerce, which will continue to be a strong growth engine. We are preparing for a time when e-commerce may represent 50 percent of our business, split between direct-to-consumer, e-retailers and pure players, which will scale social commerce as a new way to reach and engage our consumers, [and] will invest in developing loyalty to increase the lifetime value of our consumers.
“I am very ambitious for the future, and it begins in 2021,” said Hieronimus, adding the group remains cautious for the first half of 2021, but that the beauty market should return to growth.
“The engines that allowed us to overperform in 2020 will remain in 2021, and all of our divisions will rely on a strong plan of innovations,” he said.
Hieronimus believes L’Oréal can outperform the market again this year and — depending on the pandemic’s evolution — deliver a year of sales and profit growth.
“I have the ambition to shape L’Oréal as a company of the future, a global leader with strong values, committed to sustainability, to growing while respecting planetary boundaries, but also to making beauty play its role toward humanity — a role of inclusion, a role of harmony, of respect and an encouragement of diversity and differences,” he said. “With the strength and passion of the L’Oréal teams, I want to create the beauty that moves the world.”
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