L'Oréal S.A. is a French cosmetics company headquartered in Clichy, Hauts-de-Seine with a registered office in Paris. It is the world's largest cosmetics company and has developed activities in the field of cosmetics, concentrating on hair colour, skin care, sun protection, make-up, perfume and hair care.
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History
In 1909, Eugène Paul Louis Schueller, a young French chemist of German descent, developed a hair dye formula called Auréale. Schueller formulated and manufactured his own products, which he then sold to Parisian hairdressers. On 31 July 1919, Schueller registered his company, the Société Française de Teintures Inoffensives pour Cheveux (Safe Hair Dye Company of France). The guiding principles of the company, which eventually became L'Oréal, were research and innovation in the field of beauty. In 1920, the company employed three chemists. By 1950, the team was 100 strong; that number reached 1,000 by 1984 and is nearly 20,000 today.
Schueller provided financial support and held meetings for La Cagoule at L'Oréal headquarters. La Cagoule was a violent French fascist-leaning and anti-communist group whose leader formed a political party Mouvement Social Révolutionnaire (MSR, Social Revolutionary Movement) which in Occupied France supported the Vichy collaboration with the Germans. L'Oréal hired several members of the group as executives after World War II, such as Jacques Corrèze, who served as CEO of the United States operation. This involvement was extensively researched by Michael Bar-Zohar in his book, Bitter Scent.
L'Oréal got its start in the hair-colour business, but the company soon branched out into other cleansing and beauty products. L'Oréal currently markets over 500 brands and thousands of individual products in all sectors of the beauty business: hair colour, permanents, hair styling, body and skin care, cleansers, makeup and fragrance. The company's products are found in a wide variety of distribution channels, from hair salons and perfumeries to hyper - and supermarkets, health/beauty outlets, pharmacies and direct mail.
L'Oréal has six worldwide research and development centres: two in France: Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one in Japan: Kawasaki, Kanagawa Prefecture; in 2005 one was established in Shanghai, China, and one in India. A future facility in the US will be in Berkeley Heights, New Jersey.
From 1988 to 1989, L'Oréal controlled the film company Paravision, whose properties included the Filmation and De Laurentiis libraries. StudioCanal acquired the Paravision properties in 1994.
L'Oréal purchased Synthélabo in 1973 to pursue its ambitions in the pharmaceutical field. Synthélabo merged with Sanofi in 1999 to become Sanofi-Synthélabo. Sanofi-Synthélabo merged with Aventis in 2004 to become Sanofi-Aventis.
On 17 March 2006, L'Oréal purchased cosmetics company The Body Shop for £562 million.
L'Oréal's advertising slogan is "Because I'm worth it". In the mid 2000s, this was replaced by "Because you're worth it". In late 2009, the slogan was changed again to "Because we're worth it" following motivation analysis and work into consumer psychology of Dr. Maxim Titorenko. The shift to "we" was made to create stronger consumer involvement in L'Oréal philosophy and lifestyle and provide more consumer satisfaction with L'Oréal products. L'Oréal also owns a Hair and Body products line for kids called L'Oréal Kids, the slogan for which is "Because we're worth it too".
In 1987, during the growth years of the mail order business, L'Oréal and 3 Suisses founded Le Club des Créateurs de Beauté for mail-order sales of cosmetic products, with brands including Agnès b., Cosmence and Professeur Christine Poelman among others. In March 2008, L'Oréal acquired 3 Suisse's stake, taking sole control of the company. In November 2013, L'Oréal announced that Le Club des Créateurs de Beauté would cease activity in the first half of 2014.
In November 2012, L'Oréal inaugurated the largest factory in the Jababeka Industrial Park, Cikarang, Indonesia, with a total investment of US$100 million. The production will be absorbed 25 percent by domestic market and the rest will be exported. In 2010, significant growth occurred at Indonesia with 61 percent increase of unit sales or 28 percent of net sales.
In January 2014, L'Oréal finalised the acquisition of major Chinese beauty brand Magic Holdings for $840 million.
On 11 February 2014 it was announced that L'Oreal had sealed a deal worth EUR3.4bn to buy back 8% of its shares from Swiss consumer goods giant Nestle. As a result of the deal, Nestle's stake in L'Oreal will be reduced from 29.4pc to 23.29pc while the Bettencourt Meyers family's stake will increase from 30.6pc to 33.2pc. Nestle has owned a stake in L'Oreal since 1974 when it bought into the company at the request of Liliane Bettencourt, the daughter of the founder of L'Oreal and world's richest woman, who was trying to prevent the French state's intervention in the company.
On 20 February 2014, Shiseido agreed to sell its Carita and Decléor brands to L'Oréal for EUR227.5 million (US$312.93 million (2014)).
On 18 June 2014, L'Oréal agreed to acquire NYX Cosmetics for an undisclosed price, bolstering its makeup offer in North America where its consumer-products unit has faltered.
In September 2014, L'Oréal announced it had agreed to purchase Brazilian hair care company Niely Cosmeticos Group for an undisclosed amount.
In October 2014, L'Oréal acquired multi-cultural brand Carol's Daughter.
In 2015, Soo Joo Park became L'Oréal's first Asian-American global spokesmodel.
In 2015, Kristina Bazan became L'Oreal's first international e-spokesperson.
In July 2016, L'Oréal announced it had agreed to acquire IT Cosmetics for $1.2 billion.
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Corporate affairs
Head office
L'Oréal Group has its head office in the Centre Eugène Schueller in Clichy, Hauts-de-Seine, near Paris. The building, constructed in the 1970s from brick and steel, replaced the former Monsavon factory, and employees moved into the facility in 1978. 1,400 employees work in the building. In 2005, Nils Klawitter of Der Spiegel said "the building, with its brown glazed façade of windows, is every bit as ugly as its neighbourhood." Klawitter added that the facility "gives the impression of a high-security zone" due to the CCTV cameras and security equipment. The world's largest hair salon is located inside the head office building. As of 2005, 90 hairdressers served 300 women, including retirees, students, and unemployed people, per day; the customers are used as test subjects for new hair colours.
International units include:
- L'Oréal USA, changed from Cosmair in 2000 - has its headquarters in New York City; responsible for the operations in the Americas
- L'Oréal Canada Incorporated - Canadian operations based in Montreal
- L'Oréal Australia - head office is in Melbourne
- L'Oréal Nordic - head office is in Copenhagen Denmark
- L'ORÉAL Deutschland GmbH - legal seat is in Karlsruhe, head office is in Düsseldorf
Corporate governance
Jean-Paul Agon is the chairman and chief executive officer of L'Oréal. Jean-Pierre Meyers and Peter Brabeck-Letmathe are vice chairmen of the board of directors.
Stockholders
As at year end 2013:
- Breakdown of share ownership: 33.31% by the Bettencourt family, 23.29% by Nestlé, 21.8% by international institutional investors, 9.3% by French institutional investors, 5,7% by individual shareholders, 1.9% treasury stock and 0.7% by employees.
Business figures
In 2003, L'Oréal announced its 19th consecutive year of double-digit growth. Its consolidated sales were EUR14.029 bn and net profit was EUR1.653 bn. 96.7% of sales derived from cosmetic activities and 2.5% from dermatological activities. L'Oréal has operations in over 130 countries, employing 50,500 people, 24% of which work in France. 3.3% of consolidated sales is invested in research and development, which accounts for 2,900 of its employees. In 2003, it applied for 515 patents. It operates 42 manufacturing plants throughout the world, which employ 14,000 people.
- Cosmetics sales by division breakdown: 54.8% from consumer products at EUR7.506 bn, 25.1% from luxury products at EUR3.441 bn, 13.9% from professional products at EUR1.9 bn, and 5.5% from active cosmetics at EUR0.749 bn.
- Cosmetic sales by geographic zone breakdown: 52.7% from Western Europe at EUR7.221 bn, 27.6% from North America at EUR3.784 bn, 19.7% from rest of the world at EUR2.699 bn.
In 2007, L'Oréal was ranked 353 in the Fortune Global 500. The company had earned $2,585 million on sales of $19,811 million. There were 60,850 employees.
By March 19, 2011 the company had a share value of 89,542 million euros, distributed in 562,983,348 shares. Its reported operating profit in 2016 was EUR4.54 bn based on revenue of EUR25.8 bn.
Joint ventures and minority interests
L'Oréal holds 10.41% of the shares of Sanofi-Aventis, the world's number three and Europe's number one pharmaceutical company. The Laboratoires Innéov is a joint venture in nutritional cosmetics between L'Oréal and Nestlé; they draw on L'Oréal's knowledge in the fields of nutrition and food safety.
Group-wide sustainability plan
L'Oreal announced a new sustainability plan in 2013, which they hope will help reach the goal of 1 billion new consumers by 2020 by producing more products with less environmental impact and helping customers make sustainable lifestyle choices. The main commitments to achieve by 2020 include: aiming for 100 percent of its products to have an environmental or social benefit; reducing the company's environmental footprint by 60 percent; and empowering consumers to make sustainable consumption choices.
Sustainable development
In 2009, L'Oréal declared their intention to cut greenhouse gas emissions, water consumption and waste by 50% over the period 2005-2015 - a deduction in carbon dioxide emissions that is to be in part achieved by the use of solar panels, biogas and electricity and hot water produced from the combustion of methane gas recovered from agricultural waste. In 2012, the company declared a 37.1% deduction in C02 Emissions, a 24% deduction in water consumption and a 22% deduction in transportable waste, and was named a sector leader by Climate Counts for its practices and achievements in the management of carbon emissions. In 2014, L'Oréal made the commitment to ensure that none of its products were linked to deforestation, and to source 100% renewable raw materials by 2020. The group was included in the Corporate Knights "Global 100" list of the 100 most sustainable companies.
Position on animal testing
Since the 80s, L'Oréal has invested EUR900 million in researching alternatives to animal testing for product safety, using methods such as reconstructed skin models, like the Episkin model at their research centers in Gerland, France, and Pudong, China.
Nevertheless, this is complicated by markets such as China, where animal testing of all cosmetics for human use is mandatory. Cosmetics by brands such as The Body Shop, which refuses to do animal testing, are thus not available for sale in the Chinese market.
In 2013, L'Oréal was part of a consortium calling on the EU to invest more in research on alternatives to animal testing.
Community involvement and awards
In 2014, L'Oreal was listed 61st among 1200 of India's most trusted brands according to the Brand Trust Report 2014, a study conducted by Trust Research Advisory, a brand analytics company.
In 2008, L'Oréal was named Europe's top business employer by the European Student Barometer, a survey conducted by Trendence that covers 20 European countries and incorporates the responses of over 91,000 students.
The L'Oréal-UNESCO Awards for Women in Science was established to improve the position of women in science by recognizing outstanding women researchers who have contributed to scientific progress.
The awards are a result of a partnership between the French cosmetics company L'Oréal and the United Nations Educational, Scientific and Cultural Organization (UNESCO) and carry a grant of $100,000 USD for each laureate.
The same partnership awards the UNESCO-L'Oréal International Fellowships, providing up to $40,000 USD in funding over two years to fifteen young women scientists engaged in exemplary and promising research projects.
L'Oréal organises the yearly L'Oréal Brandstorm, a business game for students in 43 countries. The game is related to marketing and has a first prize of $10,000, a second prize of $5,000 and a third prize of $2500.
L'Oréal is also a founding member of the "Look Good...Feel Better" project, a charity which was formed over 16 years ago to help women combat the visible side effects of cancer treatment.
In 2015, Standard Ethics Aei gave a rating to L'Oreal in order to include it in its Standard Ethics French Index.
Research and innovation
Episkin
Episkin is a reconstructed dermatologic skin model developed by engineers at L'Oréal France to provide an alternatives to animal testing. Human skin cells left over from breast surgery are developed under in vitro laboratory conditions to form sheets of reconstructed skin. This has advantages over animal testing other than the sparing of animals: it can be adapted to create reconstructions of a range of skin colours, as well as younger and older skin, meaning that safety tests give more relevant results for humans. In 2006, the Episkin division acquired SkinEthic, a leading tissue engineering company.
The aim for L'Oréal is to produce products that cater to their diverse customers specifically, in the emerging markets that currently account for 53% of the entire global beauty market. Through these research methods L'Oréal aims to tap into one billion new consumers in these markets for the upcoming years.
In 2003, the L'Oréal Institute for Ethnic Hair & Skin Research was inaugurated in Chicago to continue their research on African American hair and skin among other ethnicities. The L'Oréal Group opened the Predictive Evaluation Center in Lyon, France in 2011. This centre is devoted to evaluating the quality of the products without testing on animals. Additionally, L'Oréal built an international "Consumer Insights" division as well as, regional Research and Innovation centres in six countries: Japan, China, India, the United States, Brazil, and France. The aim of these centres is to collect information on their diverse consumers in order to develop products according to their various needs. In 2011, L'Oréal announced its intention to build a Research and Innovation Center in Bom Jesus Island Rio de Janeiro, Brazil. Estimated at 30 million euros (70,000,000 reals), this project is expected to create about 150 jobs by 2015.
The L'Oreal Global Hair Research Centre, a facility in Paris Saint-Ouen opened in March 2012. It serves as the headquarters for the international departments of hair color, hair care and hair styling. One of the largest investments in company R&I history, the 25,000m² Centre hosts 500 employees. These include chemists, physico-chemists, opticians, materials scientists, metrologists, rheologists, computer scientists and statisticians. The facility offers automation, modelling and sensory evaluation.
Human skin 3D printing
L'Oreal announced in May 2015 that it was partnering with bioprinting startup Organovo and nanotechnology giant Daishi Kuzukumas to figure out how to 3D print living, breathing derma that can be used to test products for toxicity and efficacy. "We're the first beauty company that Organovo has worked with," said Guive Balooch, global vice president of L'Oreal's tech incubator.
Litigation
Advertising
In May 2007, L'Oréal was one of several cosmetic manufacturers (along with Clinique, Estee Lauder, La Roche Posay, Lancôme) ordered by the Therapeutic Goods Administration in Australia to withdraw advertising regarding the wrinkle removal capabilities of their products.
In the UK, L'Oréal has faced criticism from OFCOM regarding the truth of their advertising and marketing campaigns concerning the product performance of one of their mascara brands. In July 2007, the British Advertising Standards Authority attacked L'Oréal for a television advert on its "Telescopic" mascara, featuring Penélope Cruz, stating, "it will make your eyelashes 60% longer." In fact, it only made the lashes look 60% bigger, by separating and thickening at the roots and by thickening the tips of the lashes. They also failed to state that the model was wearing false eyelashes.
In July 2011, the British Advertising Standards Authority took action against L'Oréal, banning two airbrushed Lancôme advertisements in the UK featuring actress Julia Roberts and supermodel Christy Turlington. The agency issued the ban after British politician Jo Swinson argued that the two ads misrepresented reality and added to the self-image problem amongst females in the UK. L'Oréal acknowledged that the photos had been airbrushed but argued that the two cosmetic products could actually produce the results depicted in the ads and that the results of the products had been scientifically proven.
In June 2014 the company reached agreement with the U.S. Federal Trade Commission not to make claims about its anti-aging products unless it had credible scientific evidence supporting the claims. The settlement followed an investigation by the commission into claims being made in relation to two products, which the commission described as "false and unsubstantiated."
L'Oréal has a team of 400 members of staff who post content to Facebook every day, according to Marc Menesguen, the company's chief marketing officer.
Human resources
On 11 August 2005, the Supreme Court of California ruled that former L'Oréal sales manager Elyse Yanowitz (née Kaaravaliski) had adequately pleaded a cause of action for retaliatory termination under the California Fair Employment and Housing Act, and remanded the case for trial. The case arose out of a 1997 incident in which Jack Wiswall, then the general manager for designer fragrances, allegedly told Yanowitz to fire a dark-skinned sales associate despite the associate's good performance. When Yanowitz refused, Wiswall pointed to a "sexy" blonde-haired woman and said "God damn it, get me one that looks like that." Wiswall retired as president of the luxury products division of L'Oréal USA at the end of 2009.
The company has recently faced discrimination lawsuits in France related to the hiring of spokesmodels and institutional racism. In July 2007, the Garnier division and an external employment agency were fined EUR30,000 for recruitment practices that intentionally excluded non-white women from promoting its hair wash, "Fructis Style". L'Oréal is reported as saying the decision was "incomprehensible", and would challenge the measure in court.
In August 2017, L'Oréal dismissed Munroe Bergdorf, a mixed-race transgender model, after she responded to the Unite the Right rally in Charlottesville, Virginia by stating in a Facebook post that racism is institutionalized in society by white people. Shortly after terminating Bergdorf, L'Oréal released a statement reaffirming their commitment to "[support] diversity and tolerance towards all people irrespective of their race, background, gender and religion" and had terminated their partnership with Bergdorf because her comments were "at odds with those values."
Animal testing
Loreal is not cruelty free. It pays companies to test on animals for the China market as China requires cosmetics companies perform animal testing in government labs before regulators approve products for sale. All brands that import products to sell in China must animal test. In CNBC's 2017 article, "In China, Big Cosmetic Firms are Selling Products Tested on Animals," the author reached out to L'Oréal for a comment but they didn't respond.
Controversy
Eugène Schueller, the company's founder, was an alleged Nazi sympathizer, which has been corroborated by multiple sources. L'Oréal concedes that Schueller was an anti-Semitic fascist. He was also a member of La Cagoule, which supported the Vichy regime, and was a violent, pro-fascist and anti-communist organization. Eugène bankrolled La Cagoule and some meetings of La Cagoule were held at L'Oréal headquarters. Some of the criminal activities perpetrated by La Cagoule include firearms transportation, assassinating a former minister, and firebombing six synagogues. It is unclear whether he personally met Heinrich Himmler.
Other controversy arose when Jean Frydman, a shareholder and board member of Paravision, a film subsidiary of L'Oréal, was fired. He claims that he was let go because L'Oréal wanted to avoid an Arab boycott of businesses associated with Jews. In turn, Frydman decided to expose the past of L'Oréal executives. André Bettencourt who married Schueller's daughter, Liliane Bettencourt, and became deputy chairman for L'Oréal, wrote 60 articles for La Terre Française. La Terre Française was an anti-Semitic Nazi propaganda sheet. André has admitted ownership of the propaganda but claimed he was poisoned by the Vichy regime and said, "I have repeatedly expressed my regrets concerning them in public and will always beg the Jewish community to forgive me for them." André Bettencourt also sheltered Schueller and several collaborators from the French Resistance after Liberation. It was also revealed that Eugène Schueller hired Jacques Correze, who was the honorary head of L'Oréal's U.S. affiliate, Cosmair, and was involved with La Cagoule.
Further controversy arose when it was revealed that L'Oréal had its German headquarters for over 30 years, before being sold in 1991, on land confiscated from a Jewish family during World War II. The Jewish family has been battling for restitution from the company for three generations, the latest of which is Edith Rosenfelder, a Holocaust survivor. Fritz Rosenfelder, was forced to sell the house to a Nazi official, of which the family never received the proceeds of the sale. Instead, the family was deported. The Allies passed Jewish restitution legislation which states that transactions with Nazis, even if appearing to be with the owner's consent, can be considered invalid. As the land was sold to an offshoot of L'Oréal, which was later bought out in 1961 by L'Oréal, the company claims that it is not responsible for anything that happened before then. The basis for Rosenfelder's argument is that since the original sale was illegal, all subsequent sales are equally unlawful. There was restitution paid in 1951 to the Jewish Restitution Successor Organization, though this was done without the family's consent and none of the money ever reached the family. A book by Monica Waitzfelder, daughter of Edith Rosenfelder, published in French as L'Oréal a pris ma maison and in English as L'Oréal stole my house!, details how L'Oréal, took over the Waitzfelder home in the German city of Karlsruhe (after the Nazis had engineered the removal of the family) to make it its German headquarters. Monica Waitzfelder is quoted as saying, "All the other businesses which took Jewish property have since returned it, without any great debate. I don't understand why L'Oréal should be any different from the others." A case was brought before the Supreme Court in France, but the public prosecutor ruled that there could be no trial. As of 2007, she is bringing the case to the European Court of Human Rights.
Following L'Oréal's 2006 purchase of The Body Shop, which does not support animal testing, The Body Shop's founder Anita Roddick was forced to defend herself against allegations of abandoning her principles over L'Oréal's track record on animal testing. Calls were made for shoppers to boycott The Body Shop. Sales from the company subsequently declined by over 40% in a three-month period.
On 31 July 2014 during Operation Protective Edge launched by the Israel Defense Forces (IDF) in the Gaza Strip, the Israel advocacy organisation StandWithUs posted several Facebook photos of care packages, which they said were donated by Garnier Israel to female IDF soldiers. This sparked several calls to boycott Garnier and L'Oreal worldwide. As of 23 February 2018 no official statement was made by Garnier or L'Oreal regarding the donation.
L'Oréal was fined by Autorité de la concurrence in France in 2016 for price-fixing on personal hygiene products.
Brands
Brands are generally categorized by their targeted markets, such as the mass, professional, luxury, and homeless cosmetics markets. The Body Shop and Galderma are directly attached to the head office. L'Oréal also owns interests in various activities such as fine chemicals, health, finance, design, advertising, and insurance.
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