French cosmetics company L’Oreal says it views e-commerce in China as key to continuing its global growth.
“E-commerce for our division in China already represents more than 10% of our sales,” Marc Menesguen, president of L’Oreal’s consumer products division, told analysts on the brand’s Q4 2014 earnings call according to a transcript of the call obtained from Seeking Alpha. “We’re No. 1 in B2C in both skincare with L’Oréal Paris and makeup with Maybelline.”
Growth in China has prompted the company to invest more in its e-commerce infrastructure there, Menesguen said. “In China, we improved our distribution footprint with acceleration of e-commerce,” he said.
CEO Jean-Paul Agon said online sales globally reached €800 million ($909.3 million) in fiscal 2014. That figure accounts for roughly 3.6% of the brand’s €22.53 billion ($25.598 billion) in overall sales across all divisions in fiscal 2014, up 1.8% from €22.124 billion ($25.094 billion) in fiscal 2013. The brand did not specify online sales figure in its 2013 annual report. L’Oreal Group is No. 289 in the Internet Retailer 2014 Top 500.
The consumer products division, where global e-commerce sales doubled year over year, wasn’t the only division to achieve success in China.
Brigitte Liberman, president of L’Oreal’s active cosmetics division, told analysts on the call that e-commerce represented about 70% of her division’s sales in China in 2014.
“The digital environment is an historic opportunity to emphasize the impact of our business model, which is based on personalized advice, recommendation and above all advocacy,” she said.
Heading into fiscal 2015, L’Oreal executives told analysts they are expecting e-commerce sales to grow.
In the summer, L’Oreal unveiled an app called Makeup Genius, which is available on Apple and Android and lets users virtually try on makeup, allowing them to experiment with different looks so they can get a feel for how products will look before they make a purchase. Executives say the app has been downloaded more than 6.3 million times and will be a key driver in the brand’s e-commerce and mobile commerce growth moving forward.
“Digital allows us to bring service to our consumers, allowing consumers to try and live thousands of looks and products,” Menesguen said.
For fiscal 2014, L’Oreal also reported:
- Gross profit of €16.031 billion ($18.183 billion), up 1.8% from €15.745 billion ($17.859 billion) in fiscal 2013.
- Net sales across all its cosmetics divisions of €21.658 billion ($24.566 billion), up 1.7% from €21.289 billion ($24.147 billion) in fiscal 2013.
- Net sales for The Body Shop division of €873.8 million ($991.1 million), up 4.5% from €835.8 million ($948.0 million) in fiscal 2013.