Urban Living Pushing L'Oreal Sales


L'Oreal is a French cosmetics group that we own for some investors in New York. It is the world's largest beauty company. In a recent interview, CEO Jean-Paul Agon said that the two trends driving the business were pollution and selfies.


L'Oreal targets travellers


L'Oreal has targeted Millennials and Chinese consumers as their next big growth area. More specifically they are targeting these consumers at travel hubs like airports. We know that people are travelling more because experiences are becoming very desirable.


L'Oreal growing in China


The way people look has always been extremely important in human history. It is engraved in our psyche. With the likes of social media, people take the way they look even more seriously. I know there are negative connotations to an image oriented world but I am afraid that is the way the world is.


L'Oreal Q1 sales update


L'Oreal, the giant cosmetics and beauty care firm delivered a sales update a number of weeks back - Q1 2017 sales. Sales grew 7.5 percent for Q1 (relative to this time last year), to top 7 billion Euros. This is a beast, a big machine that operates across the globe. Makeup and beauty care is both a luxury and a necessity. It is an industry that fascinates me, beauty and the application of the associated products has been around for thousands of years. The application of cosmetics is quite simply to change or alter the appearance of the body, most noticeably the face. Way back, fragrances were used to mask the fact that people bathed less often.


L'Oreal fy & 4Q numbers - looking to sell Body Shop


L'Oreal reported numbers for their full year last evening, after the market had closed in Paris. The company continues to attract market share across all territories, sales grew 4.7 percent like for like to 25.84 billion Euros, earnings per share increased by 4.6 percent to 6.46 Euros per share. For the purposes of this exercise, when talking about valuations, we will reference the Paris price, which is 174 Euros a share. The stock trades at a pretty lofty 26x earnings, which is not cheap at all, the company has delivered in what has been a pretty tough operating environment. The company has four major operating divisions, you can see the breakdown via a previous message on the business - L'Oreal 3Q numbers - steady growth. The dividend has been jacked up by 6.45 percent to 3.30 Euros, maintaining the nearly just under 2 times dividend cover.


L'Oreal purchases 3 skincare businesses


L'Oreal has acquired three skincare businesses from Valeant. You may recall that from last year Valeant was not just a fallen angel, it was sent to Hades, tossed to Tartaros, booted to the underworld of investing. OK, not that bad, close though. The French cosmetics giant has paid 1.3 billion Dollars in cash, in what represents around that same amount (1.3) in percent of their market cap. For a group of skincare products that produce sales of 168 million Dollars.


L'Oreal 3Q numbers - steady growth


L'Oreal is a really great business, one of my favourite models. The Dollar share price might not have done that well, i.e. this is a case where the company has delivered and there have been certain currency issues that have weighed (and shareholder issues too), we think that the long term thesis remains intact. The group is certainly very focused on developed markets, namely Europe (around 1/3 of sales) and North America (just over one-quarter) and then the various other emerging markets, Asia Pacific accounting for 22.5 percent of sales.


L'Oreal 2Q & 6 month number - still very profitable


Cosmetics and the application thereof is thousands of years old. The ancient Greeks, the ancient Egyptians all applied make-up in different forms, as did the Chinese and the Japanese. It is not a new phenomenon. In the recent era, in Europe and the Americas, the rise of make-up can be directly linked to a rise in urbanisation, more urban related activities (eating out, visiting hotels, seeing plays and the opera and the like) gave rise to the fashion industry being more accessible and more sought after for "ordinary people".


L'Oreal 9 month sales


L'Oreal released a 9 month sales update towards the end of last week, this was for the sales period to end at September 30th, 2015. Emerging markets seem to be the biggest issue, a slowdown in China with specifically L'Oreal Luxe and what they term a "difficult Brazilian market", plus general Asia market turbulence. At face value the sales update looks decent, herewith a breakdown of the product and geographic mix:


L'Oreal 2Q numbers


Last week our favourite beauty company, L'Oreal reported their half year numbers. Given that they are based in Europe and not the US, their earnings got a big boost from the stronger dollar which is a nice change.


L'Oreal first quater trading statement


L'Oreal released a trading update for their first quarter a couple of days ago, and by couple I mean it in the classic sense, i.e. two. Talking of two's, today is the 22nd and the AGM of the company is today. Remember that the company has a pretty interesting set of shareholders, there is the history between the Bettencourt family and Nestle, which came about as a result of the French government wanting to nationalise everything in the 70's. The founder's (Eugene Schueller) daughter, Liliane Bettencourt was active in the business for years. According to Wiki, Liliane worked in the business from the age of 15, as an apprentice she would label shampoo bottles and mix cosmetics.


L'Oreal full year results


L'Oreal reported results last evening: 2014 ANNUAL RESULTS. Remembering that these are in Euro's, the ADR price is one fifth in Dollars, i.e. the ADR price that you see (closing at 37.35 Dollars last evening) is one-fifth of the Paris price. In simplest English, for each five ADR's (American depositary receipt) that you hold, that is the equivalent of one share of L'Oreal in Pairs. Got that? First things first, this company is controlled by Lilliane Bettecourt's historic shareholding and Nestle, the Swiss giant who have the shares historically too. Recently Nestle have been a seller, they sold a stake back to the company. In fact, there are 23 million shares less in issue, shares in issue have fallen from 608 million to 585 million, average over the period, there are NOW 561 million shares. Fewer shares always equals higher earnings.


A need for more plumping!


Results from L'Oreal yesterday, for their third quarter to end September, the biggest company of their kind on the planet. According to their annual report from 2013, in sales from 2013, this is the spread: L'Oreal: 28.88 billion Dollars, Unilever: 20.70 billion Dollars, Procter & Gamble: 20.08 billion Dollars, Estee Lauder: 9.98 billion and in fifth place, Shiseido: 8.38 billion Dollars. Earlier this year Shiseido sold two brands, Carita as well as Decleor (excuse me for leaving off accents here) to L'Oreal. Smaller in the bigger picture, sizeable nonetheless.


H2 2014


Yesterday evening we received first half results from L'Oreal. Overall like for like sales grew by 3.8% but due to currency fluctuations sales reported in Euros were down 1.7%. They have been hit by a double edged sword with the Euro strengthening amongst developed market currencies but at the same time many developing market currencies have weakened. For a company reporting in Euros this is of course not a good situation and explains why the share price has been flat for the better part of a year.


Sales update, currency headwinds


Last week we had first quarter sales numbers from L'Oreal. Here were the highlights. Like for like sales were up 3.5% whilst reported figures were down 2.2% because of big currency swings. As you can imagine, the Euro has strengthened considerably and this has a negative impact on a business who operates internationally but reports in Euros. Divisionally and geographically this table tells the full story.


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