L’OREAL HEAD DENIES NESTLE SELLING STAKE
Byline: Sarah Raper
PARIS — Lindsay Owen-Jones, L’Oreal’s chairman and chief executive officer, started Wednesday’s annual financial analysts’ meeting here by addressing a hot rumor: Are European news reports that Nestle plans to sell its stake in L’Oreal true?
“I can’t tell you what they’re saying in the board room at Nestle, because I am not present,” he said. “I can assure you that absolutely nothing happened in the L’Oreal board meeting [Tuesday]. There was no move either by the Nestle representatives or the Bettencourts to change anything.”
L’Oreal is majority-owned by Nestle and the family of Liliane Bettencourt — the daughter of the founder of L’Oreal — via the Gesparal holding company. Nestle holds 49 percent of Gesparal, and the Bettencourts own the remainder.
Late last week, reports circulated that the retirement of Nestle chairman Helmut Maucher in June might call into question the Swiss food group’s holdings, including L’Oreal. Furthermore, French business magazine Le Nouvel Economiste, wrote that Owen-Jones had a “secret dream” to buy back Nestle’s stake.
But on Wednesday, Owen-Jones denied that: “I have absolutely no intention of trying to sway anyone on this issue.”
As reported, L’Oreal had $654 million (3.7 billion francs) in net profits before capital gains and losses on consolidated sales of $10.58 billion (60.3 billion francs) last year. Earnings were up 10.3 percent over 1995, while sales rose 13.1 percent.
At the meeting, executives revealed that in North America, L’Oreal’s cosmetics sales rose 31.3 percent to $2 billion (11.5 billion francs) and made up 23 percent of the company’s overall cosmetics business.
Executives noted that increases in advertising and promotional spending slightly outpaced the sales rise, and that one of the reasons was last year’s increased push in makeup, including the addition of Maybelline.
In addition, research spending advanced faster than sales. Owen-Jones said he had been surprised to learn that in France, within two years L’Oreal will employ more scientists and researchers than assembly line workers.
L’Oreal’s Lanvin subsidiary broke even on sales of $60.3 million (350 million francs), including Arpege fragrance sales of $9.3 million (53 million francs).
Club des Createurs de Beaute, L’Oreal’s catalog joint venture with the French mail-order company 3 Suisses, topped $88 million (500 million francs). Already available in Germany and France, the catalog was rolled out to Japan last year and to the U.K. in January.