L’Oréal’s Chairman and CEO, Jean-Paul Agon, yesterday gave the duty free and travel retail business a big thumbs up after the company presented its first half results – and he promised a new push in China from YSL.
[Above: L’Oréal Luxe’s eclectic mix of global brands]
The results, which TRBusiness reported at the beginning of August here, showed that DF&TR sales grew by +17% against the company’s overall reported growth of +10.5%.
Commenting on the channel Agon (below left) says: “In travel retail we enjoy a comfortable leadership. It is L’Oréal that created this channel many years ago and we have maintained our leadership. This channel captures our best consumers so we are active with all our luxury brands but also other types of products. It is also here that L’Oréal Paris and the Body Shop are growing and we are also entertaining ideas for new brands that don’t exist yet… growth-driving brands.
“This is a channel that transcends geographical boundaries and it is becoming truly strategic and deserves a lot of attention.”
In other companywide developments L’Oréal has done well in the North American market in H1 (up +17.8% reported) and it was even bullish on the weak Western European market (+1.9%).
“We have gained market share like never before in the US market,” says Agon. “You have to remember that in the US this is unprecedented; we have never gained so much, so quickly – ever. With regard to Europe we, as the leading player, were under pressure but now we are regaining share despite sluggish market conditions so I believe we are being very clever in the way we invest our money.”
On the marketing mix he adds: “The digital revolution is altering the way consumers buy, behave and live; less TV and press, more time online… media consumption is changing so the marketing mix is different and we are tackling those changes in a very aggressive fashion. We talked about the digital revolution at L’Oréal back in 2010 and this has truly triggered a change in the behaviour of our marketing people across the world… and this is having dramatic results.”
SUMMER SLOWDOWN IN ASIA
While Asia Pacific saw the best sales performance in H1 (up +21.9% reported) there is some levelling off. “This summer we saw a bit of a slowdown in terms of sales in Asia,” admits Agon. “Korea is where you get the most uneven development in the luxury market. Korea is flat, zero; it was +20% a few years ago. There are all sorts of things going on in China at the moment that might explain a temporary slowdown in luxury sales. We’ll take our time and see how things go.”
This is seen as a temporary blip as L’Oréal expects full-year results to outperform the market. In particular, Agon is pleased with the way L’Oréal Luxe is performing. “We now have the brands and products to win. I am very satisfied with the luxury division and what it has done; there have been some excellent launches. This is a collective success in luxury. Growth over the next 18 months will be driven by our successful initiatives and pipeline of new launches.”
YSL TO MAKE CHINESE PUSH
The Yves Saint Laurent brand, which was acquired in 2008, is going to be strongly promoted next year in Asia having had major growth in North America in H1.
“We have started to see good results with YSL in North America, our number one priority,” says Agon. “The brand was already there but not very successful before. In sell out, it was something like +20% in H1, so very good news.”
But it is Asia where the key development will take place. “We waited for a great skincare line before launching in Asia – going there without one would have been really stupid,” explains Agon who points out that in China, brands like Lancôme can do up to 60-70% of sales in skincare.
“It [the skincare line-Ed] has been very successful so we are planning a great acceleration next year in Asia, particularly in China where until now the brand was sold by an agent,” says Agon. “Now we are taking back the brand and launching YSL and the skincare in early 2013.”
At the same time, YSL’s big female fragrance launch Manifesto, which Agon describes as embodying the spirit of YSL, will roll out to DF&TR markets in Asia and the Americas after its September debut in Europe. Academy Award nominee Jessica Chastain (above) is the face of the fragrance.