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L'Oreal buys stake in beauty brand

By Simon Pitman , 04-Mar-2008

The world's largest cosmetics company, L'Oreal, has acquired a 50 per cent controlling stake in the beauty business Le Club des Createurs de Beaute, currently owned by 3 Suisses International.

The business was created in 1987 by L'Oreal and 3 Suisses for the direct sale of designer cosmetic products, which are currently marketed on the internet and distributed by mail.

 

 

 

The business reported €111m turnover in 2007.

 

 

 

The main designer brands marketed by the business include a host of designer beauty products featuring names such as Agnes b, Comence, Thierry Mugler, Michel Klein and Pr. Christine Poelman.

 

 

 

The products, which include fragrances, hair products, make-up, skin care and sun care are mainly distributed in France, Belgium, German and Japan.

 

 

 

The move taps into growing demand for both designer label beauty products, combined with strong growth from the internet retail channel.

 

 

 

L'Oreal war chest continues to grow

 

 

L'Oreal has been enjoying strong growth in recent years, which has contributed to a considerable war chest.

 

 

 

Although the company has said that it intends to study all possible acquisitions and merger prospects, it has also clearly stated that it is only looking at larger-scale prospects that can be accretive to the company's financial results in a short time.

 

 

 

L'Oreal has been linked to a number of big names in the fashion and cosmetics world in recent months, including rumours over a stake in the Armani cosmetics business and the possibility of buying Clarins.

 

 

 

The world's largest cosmetics company completed several acquisitions during 2007 and looks set to continue in the same vein this year with high sales growth.

 

 

 

Future growth may depend on further acquisitions

 

 

 

Many industry experts believe that in order to maintain this high level of growth the company is going to have to invest in the acquisition of new business in the course of the next few years.

 

 

 

In 2006 L'Oreal bought up Sanoflore and the Body Shop, two major acquisition the scale of which have not been repeated since.

 

 

 

In the past six months, the company has bought Maly's West, the third largest beauty salon distributor in the US, in a bid to increase its foothold in the US salon hair care market after adding the professional hair care supplier Beauty Alliance to its portfolio last April.

 

 

 

Most recently, L'Oreal acquired the hair care specialist Canan in an attempt to tap into the growing cosmetics market in Turkey.

 

 

 

L'Oreal's sales for the first nine months of 2007 were $12.6bn, an increase of 7.7 per cent on the year before.

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