L'Oréal S.A.

Summary

L'Oréal S.A., through its subsidiaries, manufactures and sells cosmetic products for women and men worldwide. The company operates through four divisions: Consumer Products, L'oréal Luxe, Professional Products, and Active Cosmetics. It offers shampoos, hair care products, shower gels, skin care products, cleansers, hair colors, styling products, deodorants, sun care products, make-up, perfumes, etc. The company provides its products under the L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie, Niely, Dark and Lovely, Lancôme, Yves Saint Laurent Beauté, Giorgio Armani Beauty, Kiehl's, Urban Decay, Biotherm, Ralph Lauren, IT Cosmetics, L'Oréal Professionnel, Kérastase, Redken, Matrix, Biolage, Pureology, Decléor, Carita, Vichy, La Roche-Posay, SkinCeuticals, Roger&Gallet, CeraVe, Stylenanda, Mixa, Magic Mask, Prada, Helena Rubinstein, Valentino, Mugler, Shu Uemura, Viktor&Rolf, Azzaro, Diesel, Atelier Cologne, Cacharel, and Yue Sai brands. It sells its products through distribution channels, such as hair salons, mass-market retail channels, perfumeries, department stores, pharmacies, drugstores, medispas, branded retail, travel retail, and e-commerce. L'Oréal S.A. was founded in 1909 and is headquartered in Clichy, France.

Business description

For over 110 years, L’Oréal, the world’s leading beauty player, has devoted itself to one thing only: fulfilling the beauty aspirations of consumers around the world. Our purpose, to create the beauty that moves the world, defines our approach to beauty as inclusive, ethical, generous and committed to social and environmental sustainability. With our broad portfolio of 36 international brands and ambitious sustainability commitments in our L’Oréal for the Future programme, we offer each and every person around the world the best in terms of quality, efficacy, safety, sincerity and responsibility, while celebrating beauty in its infinite plurality.

With 87 400 committed employees, a balanced geographical footprint and sales across all distribution networks (e-commerce, mass market, department stores, pharmacies, hair salons, branded and travel retail), in 2022 the Group generated sales amounting to 38.26 billion euros. With 20 research centers across 11 countries around the world and a dedicated Research and Innovation team of over 4,000 scientists and 5 500 tech and digital professionals, L’Oréal is focused on inventing the future of beauty and becoming a Beauty Tech powerhouse.

L'Oréal Group: Inspiring Beauty Across Diverse Brands

L'Oréal Group, headquartered in Clichy, France, stands as a global leader in the beauty and cosmetic industry. With a legacy dating back to its foundation in 1909 by visionary chemist Eugène Schueller, the company has evolved into a powerhouse of innovation, creativity, and inclusivity.

Driven by a passion for enhancing self-expression and confidence, L'Oréal has nurtured an extensive portfolio of iconic brands spanning skincare, cosmetics, haircare, and fragrances. Its commitment to understanding the ever-evolving needs of consumers has propelled the company to the forefront of the beauty landscape, touching lives across continents.

Skincare and Cosmetics:

L'Oréal's diverse range of brands empowers individuals to celebrate their unique beauty. From the timeless elegance of Lancôme and Yves Saint Laurent Beauté to the vibrant, trend-setting Maybelline New York and the trusted care of Garnier and La Roche-Posay, L'Oréal offers a comprehensive array of skincare and cosmetic options that cater to varying preferences and cultures.

Haircare:

L'Oréal's haircare brands, including L'Oréal Professionnel, Kérastase, Redken, and Matrix, revolutionize hair care through innovation and expertise. These brands cater not only to the aesthetic aspirations of individuals but also to the professional needs of salons, hair stylists, and enthusiasts.

Fragrances:

Fragrance is a channel of personal expression, and L'Oréal's fragrance brands capture a multitude of scents that resonate with diverse personalities. From the timeless elegance of Ralph Lauren Fragrances to the daring spirit of Diesel Fragrances and the creative artistry of Maison Francis Kurkdjian, the fragrance portfolio evokes emotions and memories.

Professional Beauty:

L'Oréal's Professional Products Division serves as a bridge between artistic creativity and technical mastery in the world of beauty. Brands like L'Oréal Professionnel, Kérastase, Redken, and Matrix empower professionals to craft stunning transformations while nurturing hair health.

In the digital age, L'Oréal is not only a creator of products but also a pioneer in digital transformation. Through mobile apps, online platforms, and virtual experiences, the company engages directly with consumers, enriching their journeys in the world of beauty.

As an industry leader, L'Oréal is committed to sustainability, aiming to reduce its environmental impact and promote ethical practices throughout its supply chain. The company's dedication to responsible beauty echoes its belief that beauty is not just skin deep; it's a holistic journey that encompasses the well-being of individuals and the planet.

L'Oréal Group, with its rich heritage and unyielding commitment to innovation and diversity, continues to shape the beauty industry. Across its vast brand portfolio, the company invites individuals to explore, experiment, and celebrate their unique beauty, inspiring confidence and self-expression around the world.

Company mission

The desire for beauty has existed since the beginning of humanity.

It’s a universal aspiration which crosses time, countries, and cultures.

Beauty is a powerful force that moves us.

We know that beauty is more than just looking good.

Beauty gives us confidence in who we are, in who we want to be, and in our relationships with others.

For over a century we have been dedicated to one sole vocation: creating beauty.

We remain true to the pioneering spirit of our founder and enjoy the unwavering support of his family, who have always accompanied our development.

Our goal is to offer each and every person around the world the best of beauty in terms of quality, efficacy, safety, sincerity and responsibility to satisfy all beauty needs and desires in their infinite diversity.

Because beauty is a permanent quest, we harness the power of our innovation to continually enhance the performance of our products and services.

Because we value diversity, we leverage each of our brands to celebrate all expressions of beauty.

Because we strive to be exemplary with a long-term vision, we anchor our actions in our strong values and demanding ethical principles.

And because we are the global leader in beauty, we are aware that everything we do can have a meaningful impact.

Therefore:

We act to shape the future of beauty by leveraging the best of science and technology, increasingly inspired by nature.

We act to drive social innovation by offering the best working conditions, training, and social protection for our employees.

We act to build a business with inclusivity at its heart by ensuring we are as diverse as the people we serve.

We act to nurture lasting partnerships with our clients and suppliers based on mutual trust and collaboration.

We act to create value for all our shareholders, by sustaining a robust business model.

We act to champion the cause of women and to strengthen the communities with which we engage.

We act to protect the beauty of the planet by fighting climate change, respecting biodiversity and preserving natural resources.

Macroeconomic analysis

1. GDP Growth:

L'Oréal's performance is often correlated with overall economic growth. During economic expansions, consumers tend to have higher disposable income for discretionary spending on cosmetics and beauty products.

2. Consumer Confidence:

• High consumer confidence can lead to increased demand for cosmetics and luxury products, benefiting L'Oréal's higher-end brands.
• In times of economic uncertainty, consumers might cut back on non-essential spending, impacting sales.

3. Exchange Rates:

Fluctuations in exchange rates can impact L'Oréal's profitability, as it operates globally. A stronger Euro, for instance, might impact the competitiveness of L'Oréal's exports.

4. Interest Rates:

Changes in interest rates can affect consumer borrowing costs and consumer spending. Lower rates can potentially stimulate consumer spending on beauty products.

5. Inflation Rate:

Moderate inflation can influence L'Oréal's pricing strategy. If costs rise due to inflation, L'Oréal might adjust its product pricing.

6. Unemployment Rate:

• Higher unemployment might lead to decreased consumer spending on discretionary items like cosmetics.
• However, L'Oréal's diverse brand portfolio could provide some cushion, as different brands cater to various market segments.
• This could be of huge impact in countries with higher unemployment rate such as Spain with 12.7%

7. Global Economic Trends:

• L'Oréal's international presence means that its performance is influenced by global economic trends.
• Economic growth in emerging markets can provide growth opportunities for L'Oréal's expansion.

8. Technological Advances:

Technological advancements can impact L'Oréal's research and product development, leading to innovative products and solutions.

9. Sustainability Trends:

- Growing emphasis on sustainability might influence consumer preferences for environmentally friendly products. L'Oréal's sustainability initiatives could align with these trends.

10. Digital Transformation:

L'Oréal's ability to adapt to the digital landscape can impact its online sales and engagement with consumers through digital platforms.

Conclusion:

L'Oréal's business performance is intertwined with the broader macroeconomic environment. Economic growth, consumer confidence, exchange rates, and technological trends can significantly influence the company's sales, profitability, and strategic decisions. The company's diverse brand portfolio and international presence allow it to navigate varying economic conditions and consumer preferences. Additionally, L'Oréal's commitment to sustainability and digital transformation positions it to capture opportunities arising from these evolving trends.

1. United States:

The U.S. has consistently been one of the largest beauty markets in the world, and L'Oréal has a strong presence in this market. Brands like L'Oréal Paris, Maybelline New York, Lancôme, and Kiehl's have performed well in the U.S.

2. China:

China's rapidly growing middle class and increasing beauty consciousness have made it a crucial market for L'Oréal. The company has made strategic efforts to cater to Chinese consumers through various brands and product lines.

3. France:

L'Oréal's home country also remains an important market. The company's strong heritage and reputation have contributed to its success in the French market.

4. Brazil:

Brazil is a significant market for cosmetics and personal care products. L'Oréal's presence in this market has been bolstered by its brands like L'Oréal Paris and Garnier.

5. Japan:

Japan is known for its beauty and skincare culture. L'Oréal has been successful in this market through brands like Shu Uemura and Kérastase.

6. Other Developed Markets:

Other developed markets in Europe and Asia, such as the United Kingdom, Germany, and South Korea, contribute to L'Oréal's global sales.

ESG

L'Oréal's approach to Environmental, Social, and Governance (ESG) factors reflects its commitment to sustainability, ethical practices, and responsible corporate citizenship. ESG considerations have become increasingly important for businesses as stakeholders place a greater emphasis on companies' impacts on the environment, society, and their overall governance structure. Here's what you need to know about L'Oréal's ESG initiatives:

Environmental Initiatives

1. Sustainable Sourcing:

L'Oréal is committed to responsible sourcing of raw materials. The company strives to ensure that the ingredients used in its products are sustainably and ethically sourced, with a focus on biodiversity and environmental preservation.

2. Reducing Carbon Footprint:

L'Oréal has set ambitious goals to reduce its carbon emissions and energy consumption. This includes efforts to use renewable energy sources, improve energy efficiency, and reduce greenhouse gas emissions across its operations.

3. Circular Economy:

The company is actively working to implement circular economy principles by promoting recycling, reducing waste, and designing products with recyclability in mind. L'Oréal aims to achieve zero waste to landfill at its production sites.

4. Biodiversity Protection:

L'Oréal places a strong emphasis on preserving biodiversity. The company supports various initiatives to protect ecosystems, conserve biodiversity, and promote sustainable agricultural practices.

Social Initiatives

1. Diversity and Inclusion:

L'Oréal is dedicated to fostering diversity and inclusion within its workforce. The company strives to create an inclusive environment that values different perspectives, backgrounds, and talents.

2. Ethical Labor Practices:

L'Oréal adheres to ethical labor practices throughout its supply chain. The company works to ensure fair wages, safe working conditions, and ethical treatment for its employees and suppliers.

3. Gender Equality:

L'Oréal is actively involved in promoting gender equality within the company and the industry. The company has initiatives to empower women in leadership positions and support gender balance across all levels.

4. Community Engagement:

L'Oréal is engaged in various community initiatives, including education, social welfare, and supporting vulnerable communities. The company's philanthropic efforts aim to make a positive impact on society.

Governance Initiatives:

1. Transparent Reporting:

L'Oréal is committed to transparently reporting its ESG initiatives and progress. The company provides regular updates on its sustainability performance through reports and disclosures.

2. Ethical Governance:

L'Oréal maintains high ethical standards in its corporate governance. The company's leadership is accountable for responsible decision-making and upholding the company's values.

3. Board Diversity:

L'Oréal recognizes the importance of board diversity in effective governance. The company promotes diversity and expertise within its board of directors.

L'Oréal's ESG initiatives reflect its understanding of the interconnectedness of environmental, social, and governance factors in shaping the company's long-term success and impact on society. By integrating sustainability and responsible practices into its business operations, L'Oréal aims to create value for all stakeholders while contributing to a more sustainable and equitable future.

In March, L’Oréal was again ranked among the world’s most gender-equitable companies by Equileap. L’Oréal was ranked number one in France in Equileap’s 2023 Gender Equality Ranking and placed 11th globally among 3,500 companies in 23 countries. Since Equileap’s launch six years ago, L’Oréal has been recognised in every ranking published.

L'Oréal has been recognised by the international organisation Ethisphere as one of the World’s Most Ethical Companies for the 14th time. The award recognises the Group’s long-term commitment and its role as a leader in applying ethical principles to its sales practices, business and corporate culture.

The rating agency Sustainalytics granted “Industry Top Rated” status to L'Oréal in its 2023 ESG Risk Ratings. With a score of 19.1, the Group is classified as a “Low Risk" company and a top-rated performer within the industry, ranking 5th out of 105 in the Household Products group.

The Fragrance Foundation has announced that it will honour Nicolas Hieronimus, L’Oréal’s Chief Executive Officer, with its prestigious Hall of Fame Award in New York in June 2023. The award seeks to honour the extraordinary contribution of Nicolas Hieronimus to the fragrance industry for more than a decade, as well as his leadership and vision, reflecting the values of environmental responsibility, diversity, equity and inclusion promoted by the Foundation.

Research, Beauty Tech and Digital

In March, the venture capital fund BOLD (Business Opportunities for L'Oréal Development) invested in a biotechnology venture led by Geno. The investment will contribute to the development of new sustainable ingredients derived from living organisms: harnessing Geno’s biotechnology expertise, L'Oréal will replace traditional ingredients with biosourced alternatives, such as those produced from plant sugars. These new ingredients will be used in a range of L’Oréal’s products, marking an essential step towards the Group’s goals of 100% eco-designed products and 95% of ingredients in its formulas biosourced, derived from abundant minerals or circular processes by 2030.

Introducing L'Oréal Paris Colorsonic, a groundbreaking innovation in at-home hair color, marking a significant milestone as L'Oréal celebrates 115 years of excellence. Set to launch in 2024, Colorsonic revolutionizes hair coloring with its unique approach. As the first of its kind, this haircolor device simplifies the process by seamlessly blending and applying the formula at the roots, delivering salon-quality, long-lasting results in the comfort of your own home. With a single button press, Colorsonic handles the rest. It masterfully blends colorant and developer at a perfect 1:1 ratio, ensures even coverage by parting and saturating every strand, and utilizes smart bristles that move 300 times per minute, adapting to hair type for precise formula deposition. Complementing the device is L'Oréal Paris's inaugural multi-usage hair color cartridge, offering flexibility for future applications. This environmentally conscious solution offers over 20 shades, each free from harmful components like ammonia, silicones, parabens, and more, while ensuring radiant shine, hydration, and conditioning. Colorsonic, a culmination of 9 years of meticulous development, stands as a Time Magazine Invention list honoree, a CES Best of Innovation Award recipient, and is fortified by more than 20 patents. In three simple steps—choose your shade, insert the multi-use color cartridge, and press to apply—you can effortlessly achieve flawless, salon-grade hair color. Colorsonic embodies innovation, ease, and perfection for all.

Presenting HAPTA, the world's pioneering handheld computerized makeup applicator, a groundbreaking innovation by Lancôme. Building on their legacy of empowering women through personalized beauty solutions since 2009, Lancôme introduces HAPTA as a testament to their commitment to accessible beauty driven by cutting-edge technology.

HAPTA is a revolutionary device designed to bring the science of touch to individuals facing hand-motion challenges, including those with conditions like arthritis, Huntington’s Disease, and post-stroke motion limitations. This motion-stabilizing marvel addresses the needs of individuals with limited mobility or grip strength, ensuring precise makeup application becomes effortlessly attainable. It serves those with restricted arm movement, struggling with lipstick or mascara application angles, as well as those contending with hand tremors and reduced sensation.

Debuting at the Consumer Electronics Show 2023 in Las Vegas, HAPTA initially showcased its prowess in lipstick application and has since expanded to include mascara, two quintessential means of self-expression through beauty. As an embodiment of Beauty Tech, HAPTA truly democratizes beauty by making it more accessible, achievable, and user-friendly for everyone.

The operation of HAPTA is a straightforward three-step process: Insert your chosen lipstick or mascara shade, watch the device automatically power on, apply your makeup with precision, and witness HAPTA's technology counteract unintended movements to maintain product consistency. Revel in the flawless effects of HAPTA's precision makeup application.

Behind HAPTA's innovation lies advanced sensors and motion-stabilizing technology, ensuring the device remains level by constantly adjusting to the user's position. Additionally, HAPTA boasts an ergonomic design featuring an easy-grip handle, thoughtfully tailored for individuals with mobility conditions affecting their arms, hands, and wrists. With HAPTA, Lancôme introduces a transformative approach that enriches the beauty experience, granting independence and confidence to those with diverse mobility challenges.

L’Oréal is the official sponsor of the exclusive beauty accelerator within STATION F, the 366,000 square foot Parisian campus designed to host a startup ecosystem under one roof.The L’Oréal beauty accelerator will welcome up to 20 high potential early stage startups starting in January 2018 and accelerate their development by bringing them strategic mentoring and operational support.

Growth- New Acquisitions

On 3 April, L’Oréal announced that it had signed an agreement with Natura &Co to acquire Aēsop, the Australian luxury beauty brand. Created in 1987, Aēsop is a global super brand known for its skin, hair and body products, available across luxury retail, beauty and hospitality locations around the world. Aēsop operates online and in around 400 exclusive points of sale across the Americas, Europe, Australia and Asia, with a nascent footprint in China where the first store opened in 2022. The closing is subject to certain regulatory approvals and other customary conditions.

Markets

L'Oréal thrives in multiple markets within the beauty and cosmetic industry. The company's diverse brand portfolio allows it to capture opportunities across various segments and geographies. Here are some key markets where L'Oréal has been particularly successful:

1. Cosmetics and Skincare:

L'Oréal is a dominant player in the cosmetics and skincare markets globally. Brands like L'Oréal Paris, Maybelline New York, and Garnier have mass-market appeal and a wide reach. These brands cater to a diverse range of consumers seeking affordable and high-quality beauty products.

2. Luxury Beauty:

L'Oréal has a strong presence in the luxury beauty market, with brands like Lancôme, Yves Saint Laurent Beauté, and Giorgio Armani Beauty. These brands target consumers looking for premium and prestige beauty products.

3. Haircare:

L'Oréal's brands in the haircare segment, such as L'Oréal Professionnel, Kérastase, Redken, and Matrix, cater to both consumer and professional markets. These brands benefit from the growing interest in haircare and hairstyling products.

4. Global Reach:

L'Oréal's international footprint allows it to thrive in various geographic markets. The company's presence in both developed and emerging markets provides it with a balanced exposure to different consumer preferences and economic conditions.

5. Digital Transformation:

L'Oréal's emphasis on digital transformation has enabled it to thrive in the e-commerce and online retail space. The company's online platforms, partnerships, and digital marketing strategies have facilitated direct consumer engagement and sales.

6. Sustainability and Ethics:

L'Oréal's commitment to sustainability and ethical practices aligns well with the growing consumer demand for environmentally friendly and ethical products. This focus has helped the company thrive among conscious consumers who prioritize responsible brands.

7. Innovation and Research:

L'Oréal's continuous investment in research and innovation has allowed it to thrive by introducing new products and technologies that cater to changing consumer preferences and needs.

It's important to note that while L'Oréal is successful in various markets, individual brand performance may vary based on regional preferences, economic conditions, and cultural factors. Additionally, the beauty industry is dynamic and subject to shifts in trends and consumer behaviour, which can impact how well L'Oréal thrives in different markets over time.

Competitor analysis

The most prominent competitor of L'Oréal is its American counter part Estée Lauder Companies Inc.

L'Oréal:

1. Diverse Brand Portfolio: L'Oréal owns a wide range of brands across various market segments, including mass market, luxury, professional, and active cosmetics. Its portfolio includes brands like L'Oréal Paris, Lancôme, Maybelline New York, and Kérastase.

2. Global Presence: L'Oréal operates in numerous countries, providing it with a strong international footprint. It has the ability to tailor products to local consumer preferences while leveraging global trends.

3. Innovation and Research: L'Oréal invests significantly in research and innovation, leading to the development of advanced skincare, haircare, and beauty products. Its focus on science and technology enhances product quality.

4. Sustainability Initiatives: L'Oréal is committed to sustainability and ethical practices. It has implemented various initiatives to reduce its environmental impact and promote responsible sourcing.

5. Digital Transformation: L'Oréal has embraced digital platforms, e-commerce, and technology-driven marketing strategies to engage with consumers and enhance its online presence.

The Estée Lauder Companies Inc.:

1. Prestigious Brand Portfolio: Estée Lauder owns luxury and prestige beauty brands, including Estée Lauder, Clinique, MAC Cosmetics, and La Mer. Its brands often cater to a higher-end market segment.

2. Innovation and Quality: Estée Lauder is known for its focus on quality and luxury, with a reputation for innovative products and cutting-edge formulations.

3. Global Reach: The company has a strong international presence, catering to consumers seeking high-end skincare, makeup, and fragrance products in various regions.

4. E-commerce and Digital Engagement: Estée Lauder has invested in digital strategies, e-commerce platforms, and engaging online experiences to connect with consumers and drive online sales.

5. Sustainability Commitment: The company has made commitments to environmental sustainability and responsible sourcing in line with consumer demand for ethical and eco-friendly products.

Key Takeaways:

• Both L'Oréal and Estée Lauder are giants in the beauty industry, but they have slightly different brand focuses and target markets.
• L'Oréal has a more extensive brand portfolio, catering to a broader range of consumers across different price points.
• Estée Lauder specializes in luxury and prestige brands, with a strong emphasis on quality and innovation.
• Both companies are investing in sustainability, digital transformation, and engaging consumers online.

Both Estée Lauder and L'Oréal are major players in the cosmetics industry, known for their premium brands and diverse product ranges.

Estée Lauder's growth and revenue surge contrast L'Oréal's position as the largest cosmetics company.

Both companies utilize e-commerce, influencer marketing, and traditional promotions for global expansion and customer engagement.

This analysis demonstrates the strengths, strategies, and growth trajectories of Estée Lauder and L'Oréal, highlighting their positions within the competitive cosmetics market.