Presentation by Frédéric Rozé, President L`Oréal USA

Frédéric Rozé, President L’Oréal USA
International Financial Analysts May 10, 2012
AGENDA
HISTORY OF L’ORÉAL USA
L’ORÉAL USA TODAY
L’ORÉAL USA TOMORROW
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1
HISTORY OF L’ORÉAL USA
AT THE BEGINNING…… They were 25
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L’ORÉAL USA’S HISTORY
1953: Cosmair, Inc. becomes the exclusive licensing agent to import and sell L’Oréal hair color in the United States
1994: Cosmair, Inc. becomes 100% owned subsidiary of L’Oréal SA
2000: Cosmair, Inc. changes its name to L’Oréal USA
2011: L’Oréal USA represents approximately 20% of L’Oréal’s worldwide cosmetic sales
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BRAND BUILDING FOR L’ORÉAL USA
APPROXIMATELY 40% US BRANDS
PROFESSIONAL
1954
1993
CONSUMER
LUXE
1966 / 1983 1974
ACTIVE
2000 1983
1996
2000 1984
1998
1998‐2000
2000
2005 2000
2005 2000 2005 2007
2007 2007‐2011
2011 2008
2011 L'Oréal USA Investor Days - May 2012
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L’ORÉAL USA’S HISTORY
Creative hub for US global brands:
z Matrix
z Redken
z Pureology
US hubs drive
20% of L’Oreal
worldwide
consolidated
sales.
z Mizani
z Maybelline
z SoftSheen
Carson
z Essie
z Ralph
Lauren
z Kiehl’s
Since 1851
z Skinceuticals
z Clarisonic
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DRIVING ORGANIC GROWTH
A U.S. WAY OF BEING SUCCESSFUL
MAYBELLINE
#1 Cosmetics
brand
REDKEN
#1 Salon Hair
Care brand in US
grew 3X since ’98
KIEHL’S
4x in 10 years
and becoming a
global
phenomenon
MATRIX
ESSIE
3X growth
since
acquisition
#2 U.S.
Professional
Salon Brand,
reaching over
100K community
salons
PUREOLOGY
#1 Color Care
Brand in the U.S.,
+60% since
L’Oreal acquisition
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SKINCEUTICALS
Growing 2X since
acquisition in 2005
CLARISONIC
L’Oreal enters the
fast growing beauty
devices category.
L’ORÉAL USA HAS GROWN
3.5 TIMES IN 15 YEARS
$MM
+7.7%
Sales Published – Pre and Post IFRS Post IFRS
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2
L’ORÉAL USA TODAY
THE US --- A GROWING ENVIRONMENT
¾ Real GDP
2009
2010
-3.5%
2011
3.2%
2012
1.7%
¾ Population (m)
2013
2.1%
2000
2015
2.3%
2010
3.4%
2020
2015
3.2%
2030
Male
138
152
165
179
Female
144
157
171
185
Total
282
309
336
364
¾ Diversity
80%
70%
Caucasian
50.4%
49.6%
40%
Total Multi‐
Cultural
Hispanic
32%
28%
Black
20%
0%
+55m +18%next 20 yrs.
Rapid change.
69%
50%
10%
Significant growth
% Population by Race
60%
30%
Moderate growth.
13%
12%
7%
4%
4%
3%
2000
2010
2015
2020
2025
2030
2035
Sources: US Bureau of Economic Affairs, Global Insight, US Census Bureau
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2040
Asian
All Other
BEAUTY BOUNCES BACK AFTER A DIP IN 2008/2009,
REACHING 4.5% IN 2011 $38B MARKET
5
Change, %
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
‐1
‐2
Source: Growth, Kline , excluding soaps, razors, blades, oral care; market size from internal Beauty Market Survey.
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2010
2011
Skincare continues to be the largest category,
while makeup is the fastest growing
Sales by Product Category, 2011
Growth by Product Category, 2011
Makeup
Fragrance
Skincare
Toiletries
Haircare 0.0%
Source: Kline excluding soaps, razors/blades and oral care.
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2.0%
4.0%
6.0%
8.0%
BEAUTY DISTRIBUTION IN THE USA
Person to Person 6.4%
Weight
e‐tailing 1.5%
Manufacturers
Stores 2.1%
Weight & Evolution
Vertically
Integrated 7.8%
Food Drug Mass
28.5%
DRTV
4.6%
9.7%
+0.4%
Dept Stores
14.4%
Walmart
13.8%
Hair Salon
7.0%
Source: L’Oreal Beauty Market Survey
L'Oréal USA Investor Days - May 2012
49.3%
+2.3%
26.8%
+10.6%
Spec. Cosm. Stores
4.2%
Spa/Medical 2.0% Nail Salon 0.7%
14.2%
+1.9%
Warehouse Clubs 2.4% Dollar Stores 2.6%
Other Mass 2.0%
14
Mass
Professional
Selective
Direct
BEAUTY AND TOILETRIES MARKET SHARE EVOLUTION
TOP 10 BEAUTY COMPANIES
Company
2011
Procter & Gamble
14.2%
L'Oréal
13.6%
Estée Lauder
7.8%
Unilever
7.4%
Limited Brands
4.6%
Johnson & Johnson
4.5%
Coty
3.3%
Mary Kay
3.1%
Avon
3.0%
Revlon
2.3%
Private label
1.8%
Source: Growth, Kline , excluding soaps, razors/blades, oral care, at manufacturers net.
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CPD COMBINED SHARE EVOLUTION MAKE-UP,
HAIR CARE/STYLING, HAIR COLOR, FACIAL SKIN CARE
31,0
29,0
L’Oréal CPD = 26.3%
28,6
27,0
26,3
25,1
25,0
23,5
23,0
Competitor #1 = 25.1%
21,0
19,0
17,0
15,0
2007
2008
2009
2010
2011
YTD '12
Source: extracted from US IRI for Food Drug Mass, and L’Oreal estimates for Walmart based on IRI Total RetailView panel data
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L’ORÉAL PARIS VERSUS REVLON
DOLLAR SHARE OF COSMETICS THROUGH Q1 2012
Share
25
L’Oréal Paris = 15.8%
20
15
10
Revlon = 12.4%
5
0
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Data Source: 2003 and forward: Extracted from US IRI for Food Drug Mass, without Walmart
1995-1998: Nielsen including Wal-mart
Nielsen Data reported historical through 2002
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MAYBELLINE VERSUS COVER GIRL
DOLLAR SHARES OF COSMETICS THROUGH Q1 2012
Share
24.0
Maybelline = 20.5%
22.0
20.0
18.0
16.0
Cover Girl = 16.8%
14.0
12.0
10.0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Data Source: 2003 and forward: Extracted from US IRI for Food Drug Mass IRI without Walmart
1995-1998: Nielsen including Wal-mart
Nielsen Data reported historical through 2002
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2007
2008
2009
2010
2011
2012
USA: DOLLAR SHARE OF WOMEN’S
HAIR COLOUR THROUGH Q1 2012
Share
70
L’Oréal CPD* = 55.2%
60
50
40
30
20
P&G = 27.2%
10
0
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
* L’Oreal CPD figures include Soft Sheen Carson for 2001 forward only
Data Source: Extracted from US IRI for Food Drug Mass IRI FDM without Walmart from 2003 forward
1995 through 1998 Nielsen Including Wal-Mart
Nielsen data reported historical through 2002
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#1 IN SALON HAIR MARKET
L’Oréal USA
#1 with 36% Market Share
3 x P&G
5 x Estee Lauder
Source: Market size and L’Oreal USA share is from Professional Beauty Association survey; competitive shares are internal estimates.
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L’OREAL LUXE #2 IN LUXURY
z
Estee Lauder #1 38%, L’Oréal Luxe 16%
z
Clarisonic fastest growing major brand in luxury skincare +144%.
z
Kiehl’s rapid growth +20%
z
YSL Signature +15%
z
Kiehl’s Signature +20%
z
Giorgio Armani Signature +11%
z Victor
& Rolf +22%
.
Source: NPD 2011
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THE BODY SHOP TURNING AROUND
z Distribution
Modernization
– Free Standing Stores
– Sephora in JC Penney
– Ulta
– e-Commerce
253 -9% from prior year
New Pulse Boutiques introduced
300 doors
450 doors
16% of total sales, +28% in Q1
z Brand
Refresh (with pulse Boutiques)
– “Beauty with Heart”
With new visuals, packaging
– Chocomania
Sensorial body care
– Drop-of-Youth
Plant stem cell skin care
z Results
– +6.6% comp door in 2011 and similar in Q1 2012
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L’OREAL USA #1 BEAUTY ADVERTISER IN THE US
$ (000s)
2009
2010
2011
Total Media Spend
$853
$1,118
$1314
Advertiser Ranking
(all advertisers)
#15
#10
#6
Source: Kantar Measured Media ,
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BEAUTY SHARE OF VOICE
2009
2010
2011
L’Oreal USA
22.2%
26.0%
27.8%
P&G
26.5%
23.6%
23.5%
J&J
10.2%
9.2%
7.9%
Estee Lauder
3.7%
4.6%
5.8%
Coty
3.1%
5.8%
5.5%
Source: Kantar Measured Media , beauty categories excluding toiletries, soaps, razors/blades and oral products.
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POWERFUL NETWORK OF LABS & PLANTS
ILLINOIS
Institute for Ethnic Hair & Skin (Chicago)
NEW YORK
L'Oréal USA Headquarters
OHIO
Solon Streetsboro
NEW JERSEY
Washington
Clark, Franklin, Piscataway
Redmond
Cranbury, South Brunswick,
Burlington, Dayton
Clark
COLORADO
Aurora
TEXAS
Garland
ARKANSAS
North Little Rock
6 Manufacturing Plants
10 Distribution/Assembly Centers
3 Research & Development Sites
L'Oréal USA Investor Days - May 2012
Note: Solon and Clark scheduled to close in 2015
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KENTUCKY
Florence
LEVERAGING SUSTAINABILITY
Focus Areas for L’Oréal USA:
z Behaving
operate
ethically and responsibly in the communities where we
– Annual Citizens Day- engaging employees in local volunteer projects
•
Reducing impacts from our operations
– Investing in renewable sources of energy: Franklin,
Piscataway, Berkeley Heights, North Little Rock
– USGB LEED certifications: Franklin, Berkley Heights, Clark R&I pending
– Wall-to-Wall: In-house component supply
– Committing to aggressive footprint reduction targets
–
–
–
-50% Greenhouse Gases
-50% Water consumption per unit of finished product
-50% Waste per unit of finished product
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A COMPANY OF TALENT
z 10,518 Employees of which 93% are Americans.
z Embracing
Diversity:
z Our
recruitment of diverse profiles pushes our business forward and drives
innovation and creativity across all our teams
our Research & Innovation labs, our scientists represent more than 43
different countries of origin (120 company-wide)
z In
Exporting US Talents:
2009:
10 US expats
2011:
29 US expats
2012 goal:
Over 50 US expats
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The BEAUTY SHAKER AWARDS
The initiative was launched in 2010 as one event and 2 awards open to all
L’Oréal USA employees to recognize teams that excel in their jobs and incent
individuals to think out of the box, dare, be creative.
1.
The Excellence award for teams or projects that have demonstrated
excellence in an initiative in the last 12 months
2.
The Out of the Box award for individuals or teams that demonstrated
“Out of the box” thinking in a concept/solution or for new breakthrough
ideas that can shake the way we work or the Beauty World.
In 2011, the Digital Category was added.
3.
Approximately 2000 employees participated each year resulting in dozens of
projects being implemented across all Divisions and Functions of the
company.
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3
L’ORÉAL USA TOMORROW
THERE IS STILL OPPORTUNITY AHEAD
L’Oréal Share Of Market
Total Beauty
18.5%
13.6%
Source: For the US Kline, excluding soaps, razors/blades, oral care. L'Oréal USA Investor Days - May 2012
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19.6%
TOP 5 GROWTH CONTRIBUTORS TO THE GOAL
OF WINNING 1 BILLION NEW CONSUMERS
China
India
US 70MM
Brazil
Pakistan
L'Oréal
USA Investor
Days - May
Source:
L’Oreal estimates
– 2012
Strategic Prospective – December 2010
31
GEOGRAPHIC PENETRATION OPPORTUNITY
L’Oréal
North East
79.5%
Mid West
73.3%
South
82.1%
West
77.0%
Source: Target Research Group 8/2010. Females 13+ who use any beauty product form selected manufacturers.
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100MM NON-USERS OF L’ORÉAL PRODUCTS
IN THE USA
Used Any L’Oréal
%
Consumers
Total Age 13+
62.3%
159.4MM
Females
78.6%
100.9MM
Males
45.9%
58.5MM
Non-Users
L'Oréal USA Investor Days - May 2012
LUSA Research Study 2010: consumers who used any brand in past 12 months
97MM
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CATEGORY OPPORTUNITIES
L’Oreal
#3 10.6%
Men’s
#1
Women’s #4
L’Oreal
#3 8.3%
Hand & Body #11
Facial skincare #2
Sun care
#5
L’Oreal
#20
L’Oreal #1 22.3%
Nail
#3
L’Oreal
#2
Shampoo #3
Conditioner #3
Source: Kline excluding soaps, razors/blades and oral care.
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20.8%
ENGINES OF GROWTH
Under Weighted Categories
Demographics
z Facial
z Under
z Hand
Skincare
z US
and Body
z Women’s
Served Consumers Groups
Population Growth
Fragrances
z Haircare
Product Innovation
Digital Focus
Under Weighted Distribution
Selective Acquisitions
z E-Commerce
z Free
Standing Stores
z DRTV
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Thank you!
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concernant L’Oréal, nous vous invitons à vous reporter aux documents publics déposés en France auprès de l’Autorité des Marchés Financiers (également disponibles en
version anglaise sur notre site Internet www.loreal-finance.com).Ce document peut contenir certaines déclarations de nature prévisionnelle. Bien que la Société estime que
ces déclarations reposent sur des hypothèses raisonnables à la date de publication du présent communiqué, elles sont par nature soumises à des risques et incertitudes
pouvant donner lieu à un écart entre les chiffres réels et ceux indiqués ou induits dans ces déclarations.»
"This document does not constitute an offer to sell, or a solicitation of an offer to buy, L’Oréal shares. If you wish to obtain more comprehensive information about L’Oréal,
please refer to the public documents registered in France with the Autorité des Marchés Financiers (which are also available in English on our Internet site: www.lorealfinance.com).This document may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at
the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or
projected in these statements."