BW Confidential - Issue #11 - September/October 2012 - (Page 8)

Update News recap In brief Focus on advertising and emerging markets yield fruit for ELC Estée Lauder Companies (ELC) reported its second consecutive year of double-digit sales gains and record profit in fiscal 2012. Net sales were up 10% to $9.7bn for the year, about twice the growth rate of the global prestige market, while net profit rose 22.3% to $856.9m. Operating margin reached 14.2%, a performance that led it to revise upwards its operating margin target to 15.5-16% by the end of fiscal 2015. Driving sales was greater investment in advertising, especially in TV and digital, which was funded in part by a reduction in gifts and promotions. In fiscal 2012, ELC spent $2.5bn on advertising, merchandising and sampling. The group says its performance was also due to a focus on the sector’s fastest growing segments: skincare, emerging markets, travel retail (ELC’s travel-retail business has doubled in the past three years) and the US luxury tier. Emerging markets will continue to be key in fiscal 2013, although ELC said it will broaden the focus to encompass emerging-market consumers outside their home markets. It stated that for every $1 of sales it generates in China, it gets $2 from Chinese consumers elsewhere, in places like Hong Kong, New York or Paris. It also revealed that around one third of sales from luxury skincare brand La Mer come from Chinese consumers. For fiscal 2013, the group will open more than 200 pos in China. Standalone stores will continue to be a focus in emerging markets and elsewhere, with around 75 new boutiques scheduled to open in fiscal 2013. ELC operates around 800 standalones, which represent 10% of total sales. The group also revealed that it would begin a test with its Estée Lauder brand in 25 Sephora stores in the US. Looking ahead, ELC sees a continued slowdown in Western Europe. In the US, it also expects growth to be slower than to date, in the mid to high single digit range. Meanwhile, in China the group warned that macroeconomic conditions could impact future growth. For fiscal 2013, ELC expects the prestige market to grow at between 3-4%, and for its growth rate to be twice that at 6 to 8%. Coty has named Michele Scannavini as its new ceo, following the retirement of current chief executive Bernd Beetz. Scannavini has been president of the group’s selective arm Coty Prestige for the past 10 years. Beetz will remain on the Coty board as a non-executive director. Scannavini takes the reins of Coty following the group’s failed bid for Avon Products and on the eve of the company going public, with its IPO expected to be launched before the end of the year. In other news, Coty announced it had created a joint venture with LG Household & Health Care in Korea. The creation of Coty Korea is intended to enable Coty to expand its presence in Asia. The venture will be led by a Coty executive. Coty Korea will introduce its philosophy skincare brand to Korea this fall. La Prairie has expanded its New York office with a string of new appointments. The brand named Peter Gladel vp global brand marketing, a newly created position. He joined La Prairie in 2003 and was most recently general manager of the brand’s Italian affiliate. It appointed Jeanne Chinard global creative director, also a new position. Chinard formerly held positions at Ayer, Young & Rubicam and the Estée Lauder Companies. Other new appointments include Belinda Schwart, who was named director creative operations and Sandy Cordero, who was named director operational marketing. Both were previously at Estée Lauder Companies. Several North America team members now report to the brand’s global marketing department. Arden positions itself for faster growth in fiscal 2013 Elizabeth Arden says fiscal 2013 will be a “transformational year” in terms of business expansion due to the revamp of the Arden brand and the development of five new fragrance brands it acquired earlier this year. Ceo Scott Beattie added that next year will be the beginning of several years of above-industry growth rates. For the Arden revamp, the company has already begun introducing products with newly designed packaging and formulations to stores and should complete the roll out of its newlook counters at key flagship doors by early October. The company expects the repositioning of the brand—the aim is to modernize and move the brand more upscale—will double retail sales to $1.6bn, thereby catapulting it into the market’s top-10 ranking. In fragrance meanwhile, the company said that the acquisition of the Justin Bieber (pictured) and Nicki Minaj licenses from Give Back Brands and the Ed Hardy, True Religion and BCBG Azria brands from New Wave Fragrances has made it the leading celebrity fragrance group. Arden has a string of launches planned for these brands, which should boost sales over the holiday period. L’Occitane takes stake in Erborian L’Occitane has taken a 50.14% stake in France-based, Korea-inspired beauty brand Erborian, a share that will eventually rise to 63%. Erborian’s two founders Hojung Lee and Katalin Berenyi will own the remaining shares. Berenyi will retain her position of general director while Lee will continue to lead the company’s Korean subsidiary for R&D and manufacturing. The Erborian brand was founded in 2006 and claims to combine ancestral Korean medicinal science with high technology. It is distributed in more than 15 countries and was expected to do sales of €2.5m in its current financial year ending August 31, 2012. L’Occitane says it will expand Erborian’s current distribution network and help it diversify its product categories. 8 September-October 2012 - N°11 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #11 - September/October 2012

Cover
Contents
Comment
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Collistar ceo Daniela Sacerdote
Insight: Fragrance Creation
- Category overview
- Industry factfile
- Viewpoint
- Emerging markets
- Naturals
Wellness
- Spas management
- Spa case studies
Retail
- Sephora & emerging markets
- Store concepts
Digital focus Pinterest strategies
Strategy spotlight Trends to inspire
Market watch: Middle East
- Regional overview
- Industry viewpoint
- Prestige retailing
Radar Six up-and-coming beauty brands
Packaging Trends in luxury
Last word Sagentia's Peter Luebcke on devices

BW Confidential - Issue #11 - September/October 2012