Loreal Annual Report 2014 Eng

7/25/2019 Loreal Annual Report 2014 Eng

1/60

VISIT LOREAL.COMFOR THE FULL VERS ION

ANNUAL

REPORT

2014
http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014


2/60


3/60

Contents

Research and Innovation / 42

Digital / 46

Operations / 48

Human Relations / 50

Administration and Finance / 52

Corporate Social Responsibility / 54

EXPERTISETO DRIVE GROWTH

Interview with Jean-Paul Agon, Chairman and Chief Executive Officer / 03The Board of Directors / 06

The Executive Committee / 08LOral in figures / 10Cosmetics market / 12

Worldwide performances / 14Strategic acquisitions / 16

CONSUMER Products / 20

LOral LUXE / 24

PROFESSIONAL Products / 28ACTIVE Cosmetics / 32

The Body Shop / 36

Travel Retail / 38

THE WORLD OF BRANDS

BROWSE THE FULL 2014 ANNUAL REPORT ONLINEVisit loreal.com for the full 2014 Annual Report.

As you read this printed versionof the report, you can also enjoy

direct access to multimediacontentdesigned to enrich thepages you are reading and which featurethe above symbol.

How does it work? Download the LOral Financeapp on yoursmartphone or tablet. Go into the Annual Report section.

Scan the page you are interested in.

18

40
http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014http://www.loreal-finance.com/eng/annual-report-2014


4/60

Our missionBeauty for All

For more than a century, LOral has devoted itself solely to one business: beauty.It is a business rich in meaning, as it enables all individuals to express their personalities,

gain self-confidence and open up to others.

Beauty is a language

LOral has set itself the mission of offering all women and men worldwidethe best of cosmetics innovation in terms of quality, efficacy and safety.

It pursues this goal by meeting the infinite diversity of beauty needsand desires all over the world.

Beauty is universal

Since its creation by a researcher, the group has been pushing back the frontiersof knowledge. Its unique Research arm enables it to continually explore new territories

and invent the products of the future, while drawing inspiration from beauty ritualsthe world over.

Beauty is a science

Providing access to products that enhance well-being, mobilising its innovative strengthto preserve the beauty of the planet and supporting local communities.

These are exacting challenges, which are a source of inspirationand creativity for LOral.

Beauty is a commitment

By drawing on the diversity of its teams, and the richness and the complementarityof its brand portfolio, LOral has made the Universalisation of beauty its project

for the years to come.

LOral, offering Beauty for All


5/60

...

INTERVIEW

What kind of a year was 2014 for LOral?

It can be summed up in two words: progress andtransformation. Progress first of all, because the year wasmarked by major launches and market share gains. In avolatile economic context and a less dynamic market,LOral posted growth across all its Divisions and geographiczones. But 2014 was also a year of profound transformation

for LOral, to further strengthen the group and adapt to arapidly changing world.

Could you tell us more about the groupsperformance in 2014?

The groups performance was very solid. We furtherstrengthened our positions in three of our four Divisions. TheActive Cosmetics Division and LOral Luxe substantiallyoutperformed their markets in all regions. The ProfessionalProducts Division grew faster than its market. The Consumer

Products Division meanwhile saw a temporary slowdown inits growth, mainly reflecting its weaker performance in theUnited States, where after three years of increasing itsmarket share it marked a pause.

Inventingthe New LOral:

universal, digital and sustainableJEAN-PAUL AGON

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

sWATCH THE VIDEOby scanning this page with the LOral Finance app

0302
http://www.loreal-finance.com/eng/annual-report-2014/interview-jean-paul-agonhttp://www.loreal-finance.com/eng/annual-report-2014/interview-jean-paul-agonhttp://www.loreal-finance.com/eng/annual-report-2014/interview-jean-paul-agonhttp://www.loreal-finance.com/eng/annual-report-2014/interview-jean-paul-agon


6/60

INTERVIEW

In geographic terms, the group strengthened its positionsin all parts of the world, except North America. Our progresswas especially good in Western Europe, a zone that isstrategically important for the group. Profitability there isstrong, and there are bright prospects for increasing ourmarket shares, which are already high in this region. Wealso made progress in the New Markets, our number onezone since 2012, where once again we increased ourmarket shares and recorded high growth.

And in terms of results?

2014 was once again a year of very solid financial results.The group significantly raised its profitability, which reacheda record level at 17.3%. Its net profit increased, as did netearnings per share and the dividend proposed at the Annual

General Meeting, which is up by +8%.

Was 2014 an important yearof transformation?

Yes, LOral has undergone substantial strategictransformations this year to reinforce our competitiveadvantage in the beauty market. We have made majorstrategic acquisitions that ideally complement our uniqueportfolio of brands. The integration of DECLOR andCARITA means that our Professional Products Division ismoving into a new market: professional skincare. Theacquisitions of MAGIC, NIELY and NYX are adding to thepresence and potential of the Consumer Products Division

in markets of great strategic importance: skincare in Chinaand Asia for MAGIC, hair colour in Brazil and Latin Americafor NIELY, and make-up in America and the rest of theworld for NYX. Lastly, the acquisition of CAROLS DAUGHTER

will underpin our beauty expertise in order to best servemulticultural customers.

You have also stepped up digital initiatives.Is this another kind of transformation?

It certainly is. 2014 was an important year for LOrals digitaltransformation, with the appointment of Lubomira Rochetas Chief Digital Officer and a member of the groupsExecutive Committee. I am fully convinced that digitalisationwill profoundly transform the relationship between ourbrands and consumers in a positive way. We stronglybelieve that digitalisation is a very important factor inthe groups success. What is more, our decentralisedorganisation, entrepreneurial spirit, and multi -brand andmulti-channel approach are ideally adapted to the digitalworld. It thus represents a major opportunity and we intendto be trailblazers and leaders in the field of digital beauty.In 2014, we made major advances across all our Divisions andin strategic countries: these pages will give you a glimpse,and you can find out more in our online Annual Report.

Were there any other strategictransformations?

2014 was the first year in the roll-out of our major corporatesocial responsibility project: Sharing Beauty With All. Itsobjective is to make LOral into a model company that isexemplary in terms of sustainable innovation, productionand consumption, and shared growth by 2020. This is avital challenge, because sustainable development is, andincreasingly will be, an essential driver for the durablesuccess of companies in the 21stcentury.As you will see in our Progress Report, we have alreadymade significant advances in a number of fields, especiallysustainable innovation and production. For instance, at theend of 2014 we achieved a 50% reduction in CO2emissionsfrom our factories and distribution centres compared with2005. As for social issues, 2014 marked the roll-out of the

LOral Share & Care programme, an unprecedentedproject aimed at universalising optimum social protectionfor all group employees worldwide. Moreover, severalstrategically important internal transformations also tookplace this year.

What are these internal transformationsand what are your objectives?

We have started a huge simplification initiative. I am quiteconvinced that the more complex the world becomes, themore we need to simplify our approach, so as to be fast,agile, responsive, and capable of seizing up-and-comingtrends and taking advantage of all opportunities.

The aim of these transformations is to adapt the group toa fast-changing world, and to prepare it for future success.We want to be a leader with the spirit of a challenger, anda large company with the spirit of a start-up.

The groups performancewas very solid,

and we posted growthacross all Divisions

and geographic zones

...


7/60

So this is the driving force for 2015 and the years

to come?

Yes, but thats not all. We will keep on course to conquerthe beauty market, through all our Divisions, driven by our

Jean-Paul Agon, on a visit to Mexico,in the Plaza Satliteshopping mallin Mexico City.

Jean-Paul Agon on a visit to China at aMAYBELLINE NEW YORK sales point in Shanghai.

Jean-Paul Agon gives an address atthe Consumer Goods Forum in June 2014.

A leader with the spirit of achallenger, and a large company

with the spirit of a start-up

brands in all regions of the world. We are confident that theworldwide cosmetics market will continue to grow, and webelieve in our ability to outperform the market in terms oforganic growth. We will also take advantage of thefavourable impact of the monetary environment.We will rely, as always, on strong ethical principles and ontalented and committed LOral teams, which are totallydedicated to continuing our great adventure: in other words,pursuing our Beauty for All mission, our Universalisationstrategy and our goal of attracting one billion newconsumers.At the same time, we will keep on inventing the New LOral

of the 21stcentury: universal, digital and sustainable.

0405


8/60

The quality of governance relies on an open-minded

and committed Board of Directors, the composition of whichhas been further enriched and diversified.The Board fosters strategic reflection and impetus

and is an invaluable source of support for the General Management.The balance of powers is ensured by a clear distribution

of tasks between its members.JEAN-PAUL AGON

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The Boardof Directors

AN OPEN-MINDED AND COMMITTEDBOARD OF DIRECTORSEndowed with complementary financial, industrial andentrepreneurial experience and skills, the directors activelyand assiduously participate in the work of the Board andits Committees. The directors are all highly committed andvigilant. They are convinced that stringent governance cre-ates value for the company and express their opinions in

total independence, with the companys long-term interestalways first in mind. In 2014, the composition of the Boardwas broadened and diversified, with an increase in thenumber of women, and the appointment of two directorsrepresenting the employees who provide complementaryviewpoints.

A SOURCE OF STRATEGICREFLECTION AND IMPETUSThe Board of Directors plays a crucial role in setting thegroups strategic orientations. Through constructive andopen dialogue with the General Management and regularmeetings with the senior managers, the directors keep inclose touch with LOrals economic realities and are fully

informed of all the companys operations, results and chal-lenges. They review the main lines and opportunities forlong-term development, and especially acquisitions. Withan aim to continuously improve its role in strategic reflection

and impetus, the Board carries out a full evaluation of itsmethods and organisation each year. The directors ensurethat the decisions made contribute to the implementationof the strategy.

ETHICS AT THE HEART OF LORALSGOVERNANCE AND COMMITMENTSThe Board of Directors places great importance on the re-

spect of LOrals Ethical Principles Integrity, Respect,Courage and Transparency and more generally of theCode of Ethics, the third edition of which it reviewed thisyear. These commitments are the foundation namely of thegroups policies on compliance, responsible innovation,environmental stewardship, social and societal responsibil-ity and philanthropy. In 2014, the Senior Vice-President andChief Ethics Officer presented the ethics policy and the ac-tions taken in this field and its results. The Board considersthat these policies form an integral part of LOrals growthmodel, and therefore supports their implementation andregularly measures the advances made.

sVIEW MORE ON ETHICSby scanning this page withthe LOral Finance app

GOVERNANCE
http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2http://www.loreal-finance.com/eng/annual-report-2014/governance#msc-2


9/60

1/JEAN-PAUL AGON Chairman and CEOsince March 18th, 2011 (term of office renewed in 2014)

2/FRANOISE BETTENCOURT MEYERS (term of office renewed in 2013)3/PETER BRABECK-LETMATHE Vice-Chairman of the Board(term of office renewed in 2013)

4/JEAN-PIERRE MEYERS Vice-Chairman of the Board(term of office renewed in 2012)

5/ANA-SOFIA AMARAL (since July 15th, 2014)6/CHARLES-HENRI FILIPPI (term of office renewed in 2011)7/XAVIER FONTANET (term of office renewed in 2014)

8/BELN GARIJO (since April 17th, 2014)

9/BERNARD KASRIEL (term of office renewed in 2012)

10/CHRISTIANE KUEHNE (since April 17th, 2012)

11/GEORGES LIAROKAPIS (since July 15th, 2014)

12/JEAN-VICTOR MEYERS (since February 13th, 2012)

13/VIRGINIE MORGON (since April 26th, 2013)

14/ANNETTE ROUX (term of office renewed in 2011)

15/LOUIS SCHWEITZER (term of office renewed in 2013)

A diverseBoard of Directors(1)

striving to offer

Beauty for All

(1) Board members as of 12/31/2014.

1110

98

14 15132

765

4321

0607


10/60

The Executive Committee is LOrals managementbody. It sets strategic guidelines and directs thegroups activities worldwide. The organisation ofLOral changed in 2014 with the appointment of aChief Digital Officer, Lubomira Rochet. The creation ofthis position at Executive Committee level reflects

the groups determination to incorporate digitalisation

into the heart of its operating model and brandsworldwide.After two years as General Manager of Travel Retail,Barbara Lavernos has joined the ExecutiveCommittee as Executive Vice-President Operations.She has taken charge of LOrals sourcing,

production and Supply Chain.

GOVERNANCE

The ExecutiveCommittee

4

16

8

10

3 1

614


11/60

7

5

11

15

12139

2

MEMBERS OF THE EXECUTIVE COMMITTEE OF LORAL

1/JEAN-PAUL AGONChairman and CEO

2/LAURENT ATTALExecutive Vice-PresidentResearch and Innovation

3/NICOLAS HIERONIMUSPresident Selective Divisions

4/BARBARA LAVERNOSExecutive Vice-President Operations

5/BRIGITTE LIBERMANPresident Active Cosmetics Division

6/MARC MENESGUENPresident Consumer Products Division

7/CHRISTIAN MULLIEZExecutive Vice-PresidentChief Financial Officer

8/ALEXIS PERAKIS-VALATExecutive Vice-President Asia-Pacific Zone

9/ALEXANDRE POPOFFExecutive Vice-President

Eastern Europe Zone

10/SARA RAVELLAExecutive Vice-President

Communication, Sustainability

and Public Affairs11/LUBOMIRA ROCHET

Chief Digital Officer

12/FRDRIC ROZExecutive Vice-President Americas Zone

13/GEOFF SKINGSLEYExecutive Vice-PresidentAfrica, Middle East Zone

14/JRME TIXIERExecutive Vice-President Human Relations

and Advisor to the Chairman

15/AN VERHULST-SANTOSPresident Professional Products Division

16/JOCHEN ZAUMSEILExecutive Vice-President

Western Europe Zone

0809


12/60

BREAKDOWN OF 2014 SALES(Cosmetics Divisions, as %)

1stCOSMETICS GROUP

WORLDWIDE(1)

EMPLOYEES78,600

32COMPLEMENTARY BRANDS

AN INTERNATIONALPORTFOLIO OF

501PATENTS REGISTERED IN 2014

BILLION EUROS OF SALESIN 2014

22.53

Sales growth in all Divisionsand zones

The announcement on February 11th, 2014, of the disposalof 50% of Galderma leads to account for this business

in accordance with IFRS 5 accounting rule on discontinuedoperations. In accordance with IFRS 11 accounting rule,

Innov has been consolidated under the equity methodof January 1st, 2014. All figures for earlier periods

have been restated accordingly.(1) Source: Beautys Top 100 WWD, August 2014. (2) Like-for-like.(3) Other includes hygiene products and sales made by Ameri-can distributors with brands outside of the group.

7.7% Active Cosmetics

14.0% Professional Products

28.6% LOral Luxe

49.7% Consumer Products

DIVISIONS

4.6% Other(3)

9.8% Fragrances

13.2% Hair colourants

20.5% Haircare

21.9% Make-up

30.0% Skincare

BUSINESS SEGMENTS

LOrals 2014financial performances

LORAL IN FIGURES

In 2014, LOrals sales amounted to 22.53 billion euros, an increaseof +3.7%(2). In a volatile economic context and a less dynamic cos-metics market, the group posted growth in all its Divisions and in allits geographic zones. The New Markets, the number 1 zone for thegroup since 2012, accounted for 39.6% of sales.

CONSOLIDATED SALES(in millions of euros)

20142012 2013

22,53222,12421,638

2.6% Africa, Middle East

7.3% Eastern Europe

8.6% Latin America

21.1% Asia, Pacific

24.9% North America

35.5% Western Europe

New MarketsTotal

39.6% New Markets

GEOGRAPHIC ZONES

130COUNTRIES

MORE THAN


13/60

Pay-out ratio as % (7) nnDividend per share (in euros)

A dynamic shareholder return policy(at December 31st, 2014)

With shareholders equity amounting to20 billion euros, LOrals balance sheetremains particularly solid, after the pur-chase of 8% of the capital from Nestl for6 billion euros.

2014 2014

2014 2014

2012 2012

2012 2012

2013 2013

2013 2013

3,891

3,125

4,910 5.34

3,760

3,032

2,958 4.99

3,558

2,861

2,868 4.73

OPERATING PROFIT(in millions of euros)

NET PROFIT EXCLUDINGNON-RECURRING ITEMSAFTER NON-CONTROLLINGINTERESTS(1)(in millions of euros)

NET PROFIT AFTER NON-CONTROLLING INTERESTS(in millions of euros)

NET EARNINGSPER SHARE(2)(in euros)

The quality of the balance sheet, financial performanceand prospects of LOral led the Board of Directors topropose at the Annual General Meeting of sharehold-ers a dividend of 2.70 euros(4), an increase of +8%.The pay-out ratio in 2014 amounted to 50.6%(5).Moreover, LOral shareholders receive a loyaltybonus for holding their shares in registered form: apreferential dividend of +10%(6), bringing the total to2.97 euros.

78.18bnMarket capitalisation(3)

139.30Share price

(1) Net profit excluding non-recurring items after non-controlling interests does not include impairment of assets, restructuring costs, tax effects or non-controllinginterests. (2) Diluted net earnings per share excluding non-recurring items after non-controlling interests. (3) On the number of shares at December 31 st, 2014, i.e.561,230,389. (4) Dividend proposed at the Annual General Meeting on April 22 nd, 2015. (5) Based on the dividend proposed at the Annual General Meeting onApril 22nd, 2015. (6) For shareholders who continuously hold their shares in registered form for a minimum of two full calendar years, up to a maximum of 0.5% ofthe capital for the same shareholder. (7) Pay-out ratio based on diluted net profit excluding non-recurring items, after non-controlling interests, per share.

Record operating margin and strongincrease in net profit A solid balance sheet

17.3%of sales

+10%(6)loyaltybonus

2009

1.50

43.9% 44.9% 46.3% 46.8%

48.7%50.6%(5)

1.80 2.00

2.30 2.50

2.70 (4) +8.0%

2.97

2010 2011 2012 2013 2014

4.5%OF SALES

CAPITAL EXPENDITURE

63%OF TOTAL ASSETS

SHAREHOLDERSEQUITY

+6.9%AT 2.9 BILLION EUROS

NET CASH FLOW

DIVIDEND PER SHARE(in euros)

1011


14/60

2.8% Africa, Middle East

7.3% Eastern Europe

12.5% Latin America

20.9% North America

21.8% Western Europe

34.7% Asia, Pacific

GEOGRAPHIC ZONES

COSMETICS MARKET

The worldof beauty in 2014

The worldwide cosmetics marketin figuresBREAKDOWN OF THE WORLDWIDECOSMETICS MARKET(1)(as %)

In geographic terms, the New Markets, excludingJapan, were responsible for more than 80% ofworldwide market growth in 2014 (1).

(1) Source: LOral estimates of the worldwide cosmetics market in net manufacturer costs. Excluding soaps, oral hygiene, razors and blades. Excluding currencyeffects. (2) Source: Beautys Top 100 WWD, August 2014. (3) Source: WWDestimates. (4) Oral cosmetics.

With an estimated worth of 180 billion euros(1), the worldwidecosmetics market has developed at a steady pace over the pastten years. Despite slowing slightly in 2014 compared to 2013, thebeauty market continues to record solid growth, over 3%(1). It is asupply-driven market underpinned by innovation, as well aseff icacy and quali ty. For the second year, luxury anddermocosmetics were among the most dynamic markets, withgrowth of +5.2% and +5.1%(1).

GROWTH OF THE WORLDWIDE COSMETICS MARKETFROM 2005 TO 2014(1)(estimated annual growth rate, as %)

+3.6%+3.8% +4.9% +5.0% +2.9% +1.0% +4.2% +4.6% +4.6% +3.8%

20142005 2008 20112006 2009 20122007 2010 2013

MAIN WORLDWIDE PLAYERS(2)(2013 sales, in billions of USD)

30.52LOral

Unilever

Procter & Gamble

Este Lauder

Shiseido

20.50(3)

10.39(3)

7.77(3)

21.33(3) 1.2% Other(4)

10.8% Hygiene products

12.8% Fragrances

16.6% Make-up

23.3% Haircare

35.3% Skincare

PRODUCT CATEGORIES


15/60

This years main trendsThe growth of the cosmetics market continues to be drivenby the emergence of the middle classes in the New Markets,by consumers already devoted to sophisticated beautyroutines and looking for increasingly innovative products,and by the growing diversity of beauty expectations andaspirations worldwide.

Recommendation and personalisationTodays consumers are informed and connected, and are

looking to personalise their routines. In the luxury segment,the continued success of expert brands like KIEHLSand URBAN DECAY perfectly illustrates this importanttrend. The tendency is also clear in the prescription-baseddermocosmetics sector, which meets the health andbeauty expectations of a growing number of consumers.

Make-up makeswomen smileMake-up, which provides consumerswith a medium to express themselvesand their creativity, was in 2014the fastest growing category worldwideat +5.0%(1). Whats more, in largecountries, strategically important forthe group, like Brazil and China, thesegment still has remarkable potentialfor future development.

The era of digital beautyThe digital revolution is full of opportunities for the beautyworld. It enables mass-market brands to foster closer

relationships with their consumers through interaction.In selective channels, the exclusive experiences

and services offered by the brands can be prolongedand personalised. Digital media provide new ways to reach,

educate and inspire new consumers, as well as loyalcustomers, in order to stimulate the markets future growth.

Learn more about LOrals digital strategyon pages 46 and 47.

(1) Source: LOral 2014 estimates of the worldwidecosmetics market in net manufacturer costs. Excludingsoaps, oral hygiene, razors and blades. Excluding cur-rency effects.

sVIEW THE VIDEO INTERVIEW WITH LUBOMIRA ROCHET,CHIEF DIGITAL OFFICERsVIEW THE ARTICLE: E-COMMERCE: A MAJOR ASSET

FOR LORAL IN CHINAby scanning this page with the LOral Finance app

1213
http://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digitalhttp://www.loreal-finance.com/eng/annual-report-2014/digital


16/60

WORLDWIDE PERFORMANCES

LATIN AMERICA / +10.0%(1)Sales increased by +10.0%(1). The Professional

Products Division, Active Cosmetics andLOral Luxe recorded double -digit growth

and strengthened their positions.Consumer Products Division growth

was driven by LORAL PARIS with Elvive

and MAYBELLINE NEW YORK thanks inparticular to the kiosks initiative in Brazil.

NORTH AMERICA / +1.1%(1)

After strong momentum and market sharegains over the last few years, LOrals growth

was more moderate at +1.1%(1), due to atemporary slowdown of the Consumer

Products Division. The other Divisions continuedto flourish, thanks notably to their American

brands. The Consumer Products Divisionstrengthened its portfolio with the recent

acquisitions of NYX and CAROLS DAUGHTER.

In 2014, LOral posted growth in all its Divisions and geo-graphic zones. The group further strengthened its positionsin all regions of the world, except North America.

Western Europe, a strategically important zone, had agood year, with significant acceleration in the fourth quar-ter. Northern Europe delivered solid performances, espe-cially in Germany and the United Kingdom. SouthernEurope is experiencing a real revival, as LOrals growththere is now level with Northern Europe, reflecting goodgrowth in Spain, Portugal and Greece.

In the New Markets, the number 1 geographic zone since2012, LOral increased its market share once again thisyear, recording high growth, particularly thanks to goodmomentum in Eastern Europe, in Africa, Middle East andespecially in Latin America. In Asia, there was a temporaryslowdown in growth, which nonetheless remained strongin some countries, such as India.

Seizing the potentialof every market

sVIEW THE UK REPORTby scanning this page withthe LOral Finance app
http://www.loreal-finance.com/eng/annual-report-2014/uk-reporthttp://www.loreal-finance.com/eng/annual-report-2014/uk-reporthttp://www.loreal-finance.com/eng/annual-report-2014/uk-reporthttp://www.loreal-finance.com/eng/annual-report-2014/uk-reporthttp://www.loreal-finance.com/eng/annual-report-2014/uk-report


17/60

AFRICA, MIDDLE EAST / +13.5%(1)LOral increased its sales by +13.5%(1),

driven by double-digit growth and market sharegains in all Divisions. Growth was strong in

South Africa and the Gulf States, as well as in Egypt,Saudi Arabia and Pakistan. LORAL PARIS,

MAYBELLINE NEW YORK, LANCME,GIORGIO ARMANI and VICHY contributed to the

good score, along with KIEHLS and SKINCEUTICALS.

ASIA, PACIFIC / +5.3%(1)LOral recorded annual growth of +5.3%(1),

or +5.8%(1)excluding Japan. The group

strengthened its positions, thanks especially toKIEHLS, YVES SAINT LAURENT, GIORGIO ARMANI,LA ROCHE-POSAY and CLARISONIC.

India, Indonesia, Hong Kong and Australiaall recorded strong growth. MAGIC,

acquired in China in the first half of 2014,grew solidly in the key skincare mask market.

EASTERN EUROPE / +6.0%(1)LOral recorded a +6.0%(1)increase in sales, growing

significantly faster than the market, thanks notably to LOralLuxe and the Professional Products Division. The Consumer

Products Division also won market share, with very goodperformances from hair colour and deodorants. ActiveCosmetics gained market share in Russia and Turkey.

WESTERN EUROPE / +2.4%(1)In a stable market, growth stood out at +2.4%(1).

The group accelerated sales in the fourthquarter of 2014, and grew both in NorthernEurope and Southern Europe, especially inGermany, the United Kingdom and Spain.

All Divisions contributedto this growth.

(1) Like-for-like cosmetics sales growth.

1415


18/60

In 2014, LOral further enriched its unique internation-al portfolio of complementary brands with severalstrategic acquisitions. The group strengthened itsleadership in the worldwide beauty market(1)and itspositions in several regions and key categories, in-

cluding make-up in the United States and facialskincare in China. These acquisitions, which coverevery beauty segment, are in line with LOralsUniversalisation strategy, to help the group reach itsambition of conquering a billion new consumers.

Strengtheningour brand portfolioin strategic regions

STRATEGIC ACQUISITIONS

UNITED STATES

NYXProfessional mass-market

make-upOn July 30th, 2014, the acquisition of the Americanmake-up brand NYX was finalised. This brandis growing very strongly in the United States,thanks to its innovative digital communicationsstrategy, a very close relationship with vloggers(2)and its cult products, such as The Curve eyelinerand the Butter glosses range. In the ConsumerProducts Division, NYX has strengthened in particularthe digital expertise with its sophisticated socialnetwork know-how, and is taking advantageof the dynamic trend in professional make-up,now accessible through mass-market outlets.

CAROLS DAUGHTERMulticultural market expertiseCAROLS DAUGHTER, a multicultural brand focusing on natural

beauty, has been added to the LOral USA portfolio.The Consumer Products Division has thus moved into thehigh-potential multicultural beauty market, which is expandingfast in the United States.

sWATCH THE NYX 2014 FACE AWARDS VIDEOby scanning this page withthe LOral Finance app

BRAZIL
http://www.loreal-finance.com/eng/annual-report-2014/strategic-acquisitions#module-usahttp://www.loreal-finance.com/eng/annual-report-2014/strategic-acquisitions#module-usahttp://www.loreal-finance.com/eng/annual-report-2014/strategic-acquisitions#module-usahttp://www.loreal-finance.com/eng/annual-report-2014/strategic-acquisitions#module-usahttp://www.loreal-finance.com/eng/annual-report-2014/strategic-acquisitions#module-usa


19/60

CHINA

NIELY(6)Accessible hair colourin BrazilNIELY and its two flagship brands, Cor & Tonin hair colour and Niely Gold in haircare,are very well positioned and enjoy strongpopularity among middle-class Brazilianconsumers. A strategic acquisition(6)in oneof the largest hair colour and haircaremarkets, NIELY complements the ConsumerProducts Division brands already available inBrazil.

WESTERN EUROPE

DECLOR AND CARITAMoving into the professionalskincare marketFinalised in May 2014, the acquisition of DECLORand CARITA is an outstanding opportunity forthe Professional Products Division. DECLOR, whichspecialises in aromatherapy cosmetics, and CARITA,an expert anti-ageing brand, are two tremendousassets in the professional skincare market.

(1) Source: Beautys Top 100 WWD, August 2014. (2) Video bloggers. (3) Source: Mask segment, Nielsen Panel, market share value 2014. (4) Source: LOral2014 estimates of the worldwide cosmetics market based on net manufacturer prices excluding soap, oral hygiene, razors and blades. Excluding currencyeffects. (5) Source: Skincare segment, Euromonitor, market share value 2013. (6) Acquisition currently being finalised.

MAGICThe skincare mask

leader in China(3)

With the acquisition of MAGIC, finalisedin April 2014, LOral made its largestinvestment in China and furtherstrengthened its positions in the worldsnumber 2 beauty market(4). Facialmasks, at the heart of MAGICs expertise,are a widely-used beauty routine inChinas key skincare category.Alongside LORAL PARIS, the number 1skincare brand in China(5), andMAYBELLINE NEW YORK, MAGICcompletes the Consumer ProductsDivision portfolio, and its developmentprospects are promising.

1617


20/60

THE WORLDOF BRANDS

CONSUMER Products/20

LOral LUXE/24PROFESSIONAL Products/28

ACTIVE Cosmetics/32

The Body Shop/36

Travel Retail/38


21/60

1819


22/60

A PIVOTAL YEAR FORSTRENGTHENING THE DIVISIONIn a context affected by a slowdown in theworldwide market, we achieved slightly weakergrowth in 2014, with an acceleration in the fourthquarter. We made progress in Western Europeand reinforced our positions in the New Markets,

especially in Africa, Middle East, in Asia, Pacificand in Eastern Europe. Make-up is the Divisionsnumber 1 category, while haircare is core to ourgrowth, and facial skincare provides leveragefor conquering markets in Southern Asia.We continued to strengthen our portfoliothrough acquisitions in our key categories,in strategic countries of each category.MARC MENESGUENPRESIDENT CONSUMER PRODUCTS DIVISION

STRATEGIC FOCUSES IN 2014

ACQUISITIONS:Three new brands are bolstering theConsumer Products portfolio in key categories andstrategic countries: MAGIC, number 1 in face masksin China (2), NYX, the mass-market professional make-up brand, and NIELY (3), in the hair colour market inBrazil (see pages 16 and 17).

MAKE-UP:In this major market, the Division is con -solidating its positions with the acquisition of NYX,successful launches such as Miss Manga mascara byLORAL PARIS, and original digital initiatives like the

Makeup Genius app, at the cutting edge of virtualmake-up.

(1) Like-for-like. (2) Source: Mask segment, Nie lsen Panel, market sharevalue 2014. (3) Acquisition currently being finalised.

+1.6%CONSUMER PRODUCTS

DIVISION SALESGROWTH (1)

+2.9%MAKE-UP SALES

GROWTH (1)

LORAL PARIS |GARNIER

MAYBELLINE NEW YORK

SOFTSHEENCARSON

MAGIC |ESSIE |NYX

sWATCH THE VIDEO INTERVIEWby scanning this page withthe LOral Finance app

PRODUCTSCONSUMER
http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#video-type-1


23/60

More than20,000

BRITISH WOMEN TOOK PARTIN THE DEVELOPMENT OF

ULTIMATE BLENDS

1

BLENDEDFOR BRITAIN

The launch ofUltimate Blends

in the UnitedKingdom was

boosted by atailor-made

campaign.

2ULTIMATE BLENDS

BY GARNIERSix fragrances

designed to matchthe tastes of

British consumers.

3

EXTRAORDINARYOIL BY ELVIVE

From a newhaircare routineto a full product

range, the success ofExtraordinary Oil

continued in 2014.

2

Haircare successes

This year once again, haircare was a winner forthe Consumer Products Division, driven by thegood performances of its two star lines: Elvive byLORAL PARISand Ultra Doux by GARNIER.

The worldwide Elvive saga continued in 2014.European market leader (1), the brand posted verygood growth in the key haircare markets: theUnited States, China, Brazil and India. Fibrology,one of the most innovative Elvive ranges,

launched at the end of 2013, recorded a goodper formance. Fol lowing the success ofExtraordinary Oil, Elvive launched a full range in2014, which is already a pillar of the brand.

Ultra Doux by GARNIER a household name inFrance crossed the Channel in 2014 to win overthe United Kingdom, a high-potential haircaremarket. Fragrances and formulas were specifical-ly developed for the United Kingdom, to matchthe tastes and expectations of British consumers.With finely tuned positioning and a tailor-madeBlended for Britain advertising campaign, thelaunch of Ultimate Blends was a resounding suc-cess. A real growth relay for GARNIER, with signifi-

cant market share gains(2).(1) Source: Nielsen/IRI Panel, Western Europe Total, market sharevalue 2014. (2) Source: Nielsen Panel, Great Britain Total, marketshare value 2014.

1 3

2120


24/60

Facial skincareseduces Asia

The Consumer Products Division is winning over Asianconsumers with high-quality products adapted to suittheir expectations.This market is especially strategic in the mens segment,where the brands Men Expert by LORAL PARISandGarnier Men are performing well. Number 1 in theChinese market(1), Men Expert continued its resoundingsuccess in 2014, with the help of the Volcano Red Foamrange. In the mens anti-acne segment, which hasstrong potential, Acno Fight is contributing to GarnierMens growth in Asia.In womens skincare, Sleeping Essence Sakura Whitenight cream by GARNIERgot off to a good start in the

lightening segment, enabling the brand to bolster itsposition in skincare. Meanwhile LORAL PARIS, thenumber 1 skincare brand in China(2), is surfing on thepowerful V-shaped face trend in Asia, with RevitaliftV-shaper.In its first year as part of LOrals brand portfolio,MAGIC,the market leader in the mask segment(3), isdriving facial skincare growth in China, where thisbeauty routine is widely used.

(1) Source: Mens facial skincare segment, Nielsen Panel, market sharevalue 2014. (2) Source: Skincare segment, Euromonitor, market sharevalue 2013. (3) Source: Mask segment, Nielsen Panel, market sharevalue 2014.

SKINCARE MASKSBY MAGICA widely-usedfacial skincareroutine in China.

sWATCH THE SAKURA WHITE VIDEOby scanning this page with

the LOral Finance app

MENSCOSMETICSSouthern Asia isa very buoyantmarket for mensbeauty, where

Men Expert byLORAL PARISand Garnier Menare performingstrongly.

SAKURAWHITE BYGARNIER

A skincare rangefor radiant

skin that meetsAsian womens

expectations.

PRODUCTSCONSUMER
http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mrc-2


25/60

+69.5%GROWTH IN

E-COMMERCE(1)

All lightson digitalisation

Accelerating the pace of digitalisation is one ofthe priorities for the Consumer Products Division,by sharing best practices in e-commerce andfocusing on content.

The top countries contributing to the ConsumerProducts Division e-commerce sales are China by a landslide, with 13.5% of online sales (2) theUnited States, and three European countries:France, the United Kingdom and Germany.E-commerce sales are made both through ourtraditional distributor partners and on the web-sites of pure players that operate exclusively onthe Internet.

Digitalisation also enables the groups brands tooffer their consumers new services and experi-ences. The LORAL PARISMakeup Genius app isa first in the field of connected beauty, and pro-vides a genuine digital service in the make-upsegment. MAYBELLINE NEW YORKis launching thebrow trend in the mass-market with an innovativeplatform, Eyestudio Brow, which offers online diag-noses, advice from make-up artist MaribethMadron and video tutorials. It enables the brandto establish its expert status in this new and ex-panding segment, and raise the profile of theBrow Drama launch.

(1) Like-for-like, including distributor feedback and LOral esti-mates. (2) Including distributor feedback and LOral estimates.

2223

MAIN COUNTRIESCONTRIBUTING TOE-COMMERCE SALES (2)

ChinaFranceUnited StatesUnited KingdomGermany

sVIEW THE ARTICLE: TREND-SETTING MAKE-UPby scanning this page with the LOral Finance app

EYESTUDIO BROWBY MAYBELLINE NEW YORK

A platform dedicatedto eye and brow beauty

that establishes thebrands expert status.
http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/consumer-products#mc-3


26/60

THE NEW LUXURY PARADIGM2014 was another year of outperformance,with LOral Luxe growth at +7.1%(1), in a selectivebeauty market that remains buoyant. We won marketshare in each of the major world regions, especiallyin Europe, China and the United States.The luxury sector is experiencing a paradigm shift:we have entered the New Luxury era. 2014was a year of major advances for LOral Luxe,with outstanding breakthroughs in make-up andin womens fragrances, thanks especially tothe success of La vie est belle by LANCME,S by GIORGIO ARMANI and Black Opiumby YVES SAINT LAURENT.NICOLAS HIERONIMUSPRESIDENT SELECTIVE DIVISIONS


NEW LUXURY:Traditional luxury, heavily associatedwith heritage and craftsmanship, is now being meldedwith the more digital and alternative New Luxury rep-resented by the brands URBAN DECAY, CLARISONIC,SHU UEMURA and KIEHLS.

MAKE-UP:The selective make-up market is growingworldwide, driven by new segments. LOral Luxestands out from the crowd, and continues to demon-strate the brands strong innovation capacities whichare often at the heart of new trends.

DIGITALISATION:Digitalisation is a priority for the Division.E-commerce is growing steadily at +33.6%(2), thanks to thequality of the brand websites. Digital media also offer thebrands new ways of interacting with their consumers.

+7.1%LORAL LUXE SALES

GROWTH (1)

+11.6%MAKE-UP SALES

GROWTH (1)

LORAL

LUXE

sWATCH THE VIDEO INTERVIEWby scanning this page withthe LOral Finance app (1) Like-for-like. (2) Like-for-like, including distributor feedback and LOralestimates.

LANCME |GIORGIO ARMANI

KIEHLS |YVES SAINT LAURENT

BIOTHERM |RALPH LAUREN

URBAN DECAY |CLARISONIC

SHU UEMURA |VIKTOR&ROLF

DIESEL |CACHAREL

HELENA RUBINSTEIN |YUE SAI

GUY LAROCHE |PALOMA PICASSO

MAISON MARTIN MARGIELA
http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#video-type-1


27/60

3

2

1

As its 80thanniversary drew near, global brand

LANCMEdemonstrated the modernity of its takeon beauty.

Throughout the world, LANCME celebrates allwomen in their uniqueness and infinite diversity.By choosing Lupita Nyongo as the new face toexpress the quintessence of LANCME feminin-ity, the brand also established its commitment toits conception of beauty.Symbolising the brands rise in luxury, the MaisonLancmeconcept store offers consumers aunique experience as they discover the world ofLANCME and its iconic products. The first twoopenings, which took place in China and thenin France, will be followed by more than 50 new

boutiques worldwide in 2015.

As the top seller in France(1), number 2 in Europe(2)and number 4 worldwide(3), the success of La vie

est belle continued. The brand also extended

the Visionnaire range with the launch ofVisionnaire Crme, and innovated in the mas-cara segment with Grandise and its swan-neckwand technology, awarded the Prix dExcellencede la Beaut Marie Claire 2015 (4).All these in-novations are aimed at recruiting new consumersin the three key categories: fragrances, skincareand make-up.

(1) Source: Womens fragrance segment, NPD France Panel,market share value 2014. (2) Source: Womens fragrance seg-ment, aggregate NPD France, Italy, Spain, UK and IRI GermanyPanels, market share value 2014. (3) Source: Womens fragrancesegment, aggregate NPD France, UK, Spain, Italy, US and IRI Ger-many Panels, Generation Travel Retail, SegmentaLatin America,Asia Beauty Research (China, Japan, Hong Kong, Taiwan, SouthKorea), market share value 2013. (4) Source: Prix dExcellence dela Beaut 2015, Marie Claire,January 2015.

1

LA VIE EST BELLESustained successfor this fragrance,which has become

one of the topperfumes

worldwide(3).

2

GRANDISEThe patented

swan-neck wand ofthis new mascara

reaches everyeyelash, making

application easy.

3

VISIONNAIRECRME

This latest additionto the Visionnaire

range completesthe routine.

All the magic of LANCME

sWATCH THE GRANDISE VIDEOby scanning this page withthe LOral Finance app

2524
http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-3


28/60

EYE & BROWMAESTROBY GIORGIOARMANIInvented backstageat fashion shows,this multi-purposecream is a browdefiner, shadowand liner.

NAKED LIPGLOSSBY URBAN DECAYA hydrating glossthat adds thefinishing touchfor a Naked look.

BABY DOLLKISS & BLUSH BY

YVES SAINT LAURENTA single product

to colour lipsand cheeks.

LORAL

LUXE

Make-updrives growth

In a particularly dynamic market, make-up spear-headed the growth of LOral Luxe in 2014. This cat-egory is strategically important for the Division, and isa focal point for the creativity and modernity of itsbrands, which recorded good performances.

YVES SAINT LAURENTand GIORGIO ARMANIposted double-digit growth in make-up, boosted by the launches ofBaby Doll Kiss & Blush, a highly original product usedto colour both lips and cheeks, and Eye & BrowMaestro, a multi-purpose eye make-up cream that issurfing on the brow trend. Meanwhile, the Californian

brand URBAN DECAYalso made significant contribu-tions to the categorys growth, notably with more thanfive million units of Naked Palettes sold in 2014(1). Theexpert make-up and colour brands URBAN DECAYand SHU UEMURA in the midst of a revamp steppedup their point-of-sales presence in 2014 with newcounters.

(1) In sell-out.

sWATCH THE BABY DOLL KISS & BLUSH VIDEOby scanning this page withthe LOral Finance app
http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mrc-2


29/60

1

Alternativebrandssymbolise

New Luxury

In 2014, the alternative brands each with itsown cultural identity were core to the Divisionsgrowth.

KIEHLS,acquired in 2000, continued its globalsuccess story. Thanks to its unique business modeland point-of-sales service embodying some ofthe selective channels best practices the NewYork brand posts strong growth year after year.Drawing on its emblematic products, andlaunches such as Hydro-Plumping Re-TexturizingSerum Concentrate in 2014, KIEHLS offers itscustomers effective formulas with highly concen-

trated natural ingredients.URBAN DECAY,the trend-setting brand for make-up addicts, recorded the highest growth rate inthe Division and doubled its sales in two years (1).The key to its success? Iconic products such asNaked Palette, buzz on social networks, and astrong focus on the points of sale. LOral hashigh hopes for the Californian brand, which con-tinued its worldwide expansion in 2014, reachingeight new countries.

Seattle native CLARISONICis one of the most dy-namic brands in the LOral Luxe portfolio. As theleader in at-home instrumental cosmetics(2), the

brand offers high-tech solutions, like this yearsanti-pollution approach and new Deep PoreCleansing kit. Now operating in 45 countries, thebrand is swiftly expanding worldwide, with strongperformance, particularly in Western Europe at+48.5%(1).

(1) Like-for-like. (2) Source: Kline study Beauty Devices 2013:Global Market Brief, March 2014.

2

1

NAKED PALETTEBY URBAN DECAY

Subtly-colouredeyeshadow paletteswith powerful

consumer appeal.

2

KIEHLSWorldwide success

built on threepillars: respectingscience, delivering

product qualityand meeting

customerexpectations.

sVIEW THE ARTICLE: SUCCESS OF THE GREAT DESIGNER BRANDSby scanning this page with the LOral Finance app

2726
http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mc-4http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mc-4http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mc-4http://www.loreal-finance.com/eng/annual-report-2014/loreal-luxe#mc-4


30/60

A NEW STRATEGIC CHAPTERFOR THE DIVISIONWith the acquisition of DECLOR and CARITA,the Professional Products Division is now presentin all professional beauty categories: haircare,nail beauty and skincare. As the long-establishedleader in professional haircare (1), we outperformedthe market once again this year. We have

a differentiated strategy tailored to each geographicregion: inspiring customers and restoringmomentum in mature markets; and promotingprofessional beauty in the New Markets.Education, extending our distribution networkand making our brands more attractiveare our three main growth drivers.AN VERHULST-SANTOSPRESIDENT PROFESSIONAL PRODUCTS DIVISION

PRODUCTSPROFESSIONAL


HOLISTIC BEAUTY:The Divisions portfolio covers thewhole range of beauty professions. This is a tremendousgrowth opportunity, especially in markets where con-sumers are increasingly seeking a holistic approach tobeauty.

NEW MARKETS:In these geographic zones, which holdthe promise of future growth, the main challenges areprofessionalisation, in order to promote the beautyprofessions; and the creation of strong partnershipswith hairdressers to extend our distribution network.

EDUCATION:Training for beauty professions is theDivisions key growth driver, and provides essential sup-port for market development. In 2014, more than 3.5

million beauty professionals were in contact with oureducation teams.

LORAL PROFESSIONNEL|KRASTASE

REDKEN|MATRIX|PUREOLOGY

DECLOR|SHU UEMURA ART OF HAIR

ESSIE |CARITA |MIZANI

+2.6%PROFESSIONAL

PRODUCTS DIVISIONSALES GROWTH (2)

+2.7%LORAL PROFESSIONNEL

SALES GROWTH (2)

sWATCH THE VIDEO INTERVIEWby scanning this page withthe LOral Finance app (1) Source: Kline study Salon Hair Care: World Market Analysis andOpportunities, July 2014. (2) Like-for-like.
http://www.loreal-finance.com/eng/annual-report-2014/professional-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/professional-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/professional-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/professional-products#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/professional-products#video-type-1


31/60

1 2

Finalised in May 2014, the acquisition of DECLORand CARITA,two attractive brands with strongpositions in the professional skincare market, isan outstanding opportunity for LOral.

DECLOR is a specialised aromatherapy-basedcosmetics brand jointly founded by an aroma-therapist and an aesthetician. In 1974 it launchedoil-based skincare products, initially for the faceand then for the body. Its success stems from itsinstitute-based aromatic beauty treatments and

its sensuous oils. DECLOR complements theProfessional Products Divisions portfolio by open-ing up a new territory and providing genuineexpertise in essential oils.

CARITA, an expert brand in the anti-ageing seg-ment, has a special place among the profes-sional luxury brands thanks to its cutting-edgetechnology and its holistic concept of beauty,encompassing the face, body and hair. Its suc-cess is based on a unique combination of effec-tive formulas, devised and developed for institutetreatments; and devices using innovative equip-ment such as LED (1)and ultrasound. Thanks toCARITA, LOral will seize promising professionalbeauty market opportunities, especially in Asia.

1

DECLORSpecialising in

essential oils, thebrand creates

fabulous aromaticbeauty institute

treatments.2

CARITAThis professional

luxury brandspecialises in

anti-ageing, andowes its successto its advanced

technology.

Two new skincare assets

(1) Light-Emitting Diode.

2928


32/60

SERIOXYLBY LORAL

PROFESSIONNELTwo serums for fine

and thinning hair,one for the scalpand the other for

the hair fibre.

Haircare was the category that posted the strongestgrowth in 2014. Its secret? Major innovations with strongscientific value that are adapted to suit womens ex-pectations, both in terms of products and associatedservices.

The pioneering scalp care brand KRASTASEsaw thesuccess of Densifique confirmed this year in the hairdensity segment and by the Prix dExcellence de laBeaut Marie Claire 2015(1).The brand also demonstrat-ed its continued ability to innovate with the high-profilelaunch of Discipline. Derived from LOral research intohair movement and from a deep understanding ofwomens expectations, this haircare range is based on

a new routine to give control and shape.The LORAL PROFESSIONNELbrand is innovating withSerioxyl, a concentrate of expertise from LOral Researchmade into a unique professional and tailor-made pro-gramme. It has also launched Absolut Repair Lipidium,inspired by Brazilian hair, with a salon procedure and ahome routine.

The accessible professional brand MATRIXis successful-ly revamping its Biolage franchise. The new range hasbeen well received in all strategic markets, and is invalu-able in terms of winning over new consumers.

(1) Source: Prix dExcellence de la Beaut 2015, Marie Claire,January 2015.

Haircareinnovations

PRODUCTSPROFESSIONAL

DISCIPLINEBY KRASTASEKRASTASE isleading the wayin smoothnessand bounce.

ABSOLUT REPAIRLIPIDIUM BYLORALPROFESSIONNELA range of sevenproducts to repairhair fibre.


33/60

LORALPROFESSIONNEL

at the cuttingedge of trends

LORAL PROFESSIONNELis the first contributor to theDivisions growth. The brand is determined tostrengthen its leadership worldwide(1), by being atthe heart of the latest trends and using cutting-edgeinnovations to promote hairdressers expertise.

2014 was a good year for the brand in terms of growth.LORAL PROFESSIONNEL is underpinned in particularby two dynamic categories: hair colour, with Inoa andthe launch of popular new Majirel colours; and styling,with the success of the new Wild Stylers range fromTecni.ART. Brazil, Spanish-speaking America, EasternEurope and India spearheaded the brands expan-sion in 2014. LORAL PROFESSIONNEL is launching twoinnovations that reflect its scientific expertise and the

quality of its services: Serioxyl in the fine and thinninghair segment and Absolut Repair Lipidium for dam-aged hair. It all begins with the hairdressers diagno-sis and advice, followed by an exclusive salontreatment, and then continues in the consumershome with a routine featuring star products. High-performance formulas and hands-on expertise arecombined to deliver a professional result.

The brand participates in many fashion shows, andthis year further strengthened its connection withfashion by creating It Looks, mirroring the latest trendsin colour, cuts and styling. These hairstyles, worn by ItGirls, reflect the spirit of LORAL PROFESSIONNEL. In2014, the brand teamed up for the first time with an

international ambassador, Kirsten Dunst, who was theface of the years key launches.

(1) Source: Kline study Sa lon Hair Care: World Market Analysis andOpportunities, July 2014. (2) LORAL PROFESSIONNEL sales growthin styling, like-for-like. (3) Oil Delivery System.

1

IT LOOKSChen Ran is one of

the ambassadors ofthe brands latest

It Looks styles.

2

INOAODS2 technology (3)

underpins thesuccess of Inoa,

which continued toaccelerate in 2014.

2

1

+8.7%STYLING CATEGORY

GROWTH (2)

sVIEW THE ARTICLE: THE UNITED STATES LEADS THE WAYby scanning this page with the LOral Finance app

3130
http://www.loreal-finance.com/eng/annual-report-2014/professional-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/professional-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/professional-products#mc-3http://www.loreal-finance.com/eng/annual-report-2014/professional-products#mc-3


34/60

VICHY |LA ROCHE-POSAY

SKINCEUTICALS |ROGER&GALLET

SANOFLORE

OUTPERFORMINGA DYNAMIC MARKETIn a dynamic dermocosmetics market, the ActiveCosmetics Divisions sales continued to increase at+8.7%(1), driven especially by LA ROCHE-POSAYand the fast growth of SKINCEUTICALS.Our brands innovations with high scientific valueand the roll-out of our multi-channel approach

were powerful growth drivers in 2014.Our longstanding and privileged partnerships withdermatologists are one of the Divisions greatstrengths, and this year we held the SkinAlliancein Dermocosmetic Science Forum to bringtogether the future opinion leaders of Europeandermatology and raise awareness aboutdermocosmetics excellence.BRIGITTE LIBERMANPRESIDENT ACTIVE COSMETICS DIVISION


DERMACENTERS:With the ambition to adapt its distribu-

tion model by taking on board the realities of differentmarkets, the Active Cosmetics Division continued to openlarge numbers of dermacenters worldwide, includingsome in travel retail outlets.

SKINALLIANCE IN DERMOCOSMETIC SCIENCE FORUM:This forum brought together for the first time the futureopinion leaders of the dermatological fields to discussthe science of dermocosmetics. Very stimulating ex-changes took place between dermatologists andLOral researchers on topics ranging from AdvancedResearch to evaluation.

DIGITALISATION:The e-skin.com platform, which fea-tures content on all Active Cosmetics brands, offers

diagnoses and expert advice, and hosts a communityof Internet users interested in health and beauty. It isan emblematic example of the opportunities providedby digitalisation.

+8.7%ACTIVE COSMETICS


+14.5%LA ROCHE-POSAYSALES GROWTH (1)


(1) Like-for-like.

COSMETICSACTIVE
http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#video-type-1


35/60

New expertise,new

formulations

In 2014, three major scientific advances high-lighted the Active Cosmetics Divisions expertisein dermocosmetics.

With Lipikar Baume AP+, LA ROCHE- POSAYhasachieved a breakthrough in the field of skin al-lergies. Thanks to the discoveries made byLOral Research in the microbiome field (seepage 43), the brand has moved into a newhigh-potential area of cosmetics. For dry skinwith atopic tendency, Lipikar Baume AP+ helpsto restore the microbiome balance and diversity.

This innovative approach prevents and spacesout flare-ups.

With its Liftactiv franchise, European anti-ageingmarket leader (1), VICHYoffered a new approachto skin ageing in 2014 by focusing on the signs ofage that appear during the day. Launched inSeptember, Liftactiv Supreme targets this dailyageing process by using a continuous correc-tion formula over the course of a day and in thelonger term. The formula, inspired by blur tech-nology, meets womens expectations for resultsvisible immediately after application.

SKINCEUTICALS,a pioneer in cosmeceuticals(2),

has opened up a new technological approachto antioxidants with Resveratrol B E. It is the fi rsttime such a high concentration of pure, stabil-ised resveratrol has been used in a cosmeticsproduct. This innovation has strengthened thebrands expertise and scientific positioning.Resveratrol B E night concentrate, which comple-ments the brands daily care products, is also apromising growth relay for SKINCEUTICALS.

(1) Source: IMS Health, Pharmatrend Europe, anti-ageing marketin 8 European countries (France, Italy, Germany, Spain, Be lgium,Netherlands, Austria and Switzerland), CMA November 2014, invalue and volume. (2) The word cosmeceuticals is created fromcosmetics and pharmaceuticals.

1

LIPIKARBAUME AP+ BY

LA ROCHE-POSAYMore than just a

calming cream,it spaces out severe

dryness flare-ups.

2

RESVERATROL B EBY SKINCEUTICALS

A night-time antioxidantconcentrate with 1%

pure resveratrol.

3

LIFTACTIV SUPREMEBY VICHY

VICHY acts asan everyday

partner againstdaily ageing.

sWATCH THE VIDEO ONTHE LIPIKAR BAUME AP+ INNOVATIONby scanning this page withthe LOral Finance app

2

3

1

3332
http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#mrc-3


36/60

GULF STATESWith the opening of

six dermacenters,the Division isoffering a new

consumer experience.

BRAZILActive C[10] facialskincare treatment byLA ROCHE-POSAYwas developedspecifically to meetthe expectations ofBrazilian women.

WESTERNEUROPEThe renovationof pharmaciesis leveraginggrowth inthe Divisionstraditionalmarket.

Three goodregional

performances

+5.6%ACTIVE COSMETICS


WESTERN EUROPE

No.1THE ACTIVE COSMETICS

DIVISION IS THEDERMOCOSMETICSLEADER (1)

BRAZIL

6DERMACENTERS

OPENED IN 2014

GULF STATES

Three regions made significant contributions to Active CosmeticsDivision growth in 2014.The Division, which was already the dermocosmetics leader inBrazil(1), posted considerable growth there once again in 2014. Sowhat are the secrets behind this success? Products conceived es-pecially for Brazilian skin, such as Active C[10] by LA ROCHE-POSAY,and a business model based on a very close relationship withhealth professionals. VICHYand its products, which are well-suitedto the Brazilian market, are also at the heart of the Divisions growth.Efforts to conquer a new form of distribution have begun in theGulf states, where six dermacenters opened in 2014. These spe-cial sales areas inside pharmacies offer a new consumer ex-

perience, with personalised advice and diagnoses. TheROGER&GALLETcounters, inspired by the Boutique du BonheurinParis, offer a unique sensorial experience.As the Active Cosmetics Divisions traditional market, WesternEurope remains a region of great strategic importance in growthterms. The brands LA ROCHE-POSAY, SKINCEUTICALSandSANOFLOREare particularly dynamic in this region.

(1) Source: IMS Brazil Panel, dermocosmetics market, market share value 2014.(2) Like-for-like.

COSMETICSACTIVE


37/60

2

9SCIENTIFIC STUDIES SUPPORT

THE EFFICACY OFTHE LA ROCHE- POSAY

ANTI-POLLUTIONROUTINE

1

At +14.5%(1), LA ROCHE- POSAYachieved a fifthyear of double-digit growth and proved itself tobe an important growth driver for the ActiveCosmetics Division. At the heart of the brandsperformance, the launches of Lipikar Baume AP+and Effaclar Duo [+] illustrate its high scientific

and clinical standards.LA ROCHE-POSAY posted double-digit growth in2014 in all geographic zones, reflecting the suc-cessful internationalisation of its business model.In China for example, the brand has establisheditself thanks to its dermatological expertise in thefield of pollution, a key issue for Chinese consumers.LA ROCHE-POSAY offers them a routine featuring

three flagship products, whose efficacy has beenconfirmed by the findings of nine scientificstudies.

True to its mission statement A better life forsensitive skin LA ROCHE-POSAY launched the

Lipikar Families programme in September 2014,to provide effective support for people withatopic skin and their families. Selected by partnerdermatologists, they receive a years supply ofLipikar products, benefit from direct advice fromdermatologists and are given access to a digitalcommunity platform.

(1) Like- for-like.

1

EFFACLAR DUO[+]Its anti imperfection benefitswere positively evaluated by

Asian consumers, who are themost demanding in this field.

2

INTERNATIONALISATIONThe LA ROCHE-POSAYbusiness model, based on

high scientific and clinicalstandards, is being rolled

out successfully in allgeographic zones.

sVIEW THE ARTICLE: VICHY SUPPORTS WOMENby scanning this page with the LOral Finance app

Global success forLA ROCHE-POSAY

3534
http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#simple-content-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#simple-content-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#simple-content-type-1http://www.loreal-finance.com/eng/annual-report-2014/active-cosmetics#simple-content-type-1


38/60

THE BODY SHOP

3,119STORES

WORLDWIDE

THE BODY SHOP DIFFERENCEWith its unique positioning that complements the LOral portfolio,

The Body Shop performed well at the end of 2014.Making skincare our strategic priority paid off, and once again this year

the Christmas holiday period accounted for a significant proportionof sales. The Americas drove the brands growth in 2014,

with especially rapid expansion in Brazil, following the acquisitionof a majority stake in Emporio Body Store.

JEREMY SCHWARTZ

CHAIRMAN AND CEO OF THE BODY SHOP


BRAZIL:One year after taking a majority stake in Emporio Body Store, The Body Shopis continuing to win over Brazilian consumers. In 2014, the brand selected andlaunched star product ranges in Emporio Body Store outlets, and opened some 20free-standing stores. The quality of the ingredients and the unique customer ex-perience, fully in line with Brazilian consumers aspirations, are opening up very richopportunities for The Body Shop in Brazil, which is the fourth largest beauty marketin the world (1).

PULSE 3.0:2014 also saw the launch of Pulse 3.0, a new store format, with three aims

in mind: to showcase the sensorial appeal of the products, to highlight the skincareexpertise of The Body Shop and to personalise the consumer experience.

(1) Source: LOral 2014 estimates of the worldwide cosmetics market in net manufacturer prices. Excludingsoaps, oral hygiene, razors and blades. Excluding currency effects.

20STORES OPENED

IN BRAZIL IN 2014

SOME


39/60

3

2

1

A look backat the yearskey launches

The end-of-year festive period is very importantfor The Body Shop. This Christmas, it not onlylaunched Glazed Apple, a brand new seasonalrange, but also an Advent calendar filled withnew products and surprises. The brand reinvig-orated its gift sets and initiated a partnershipwith War Child(1): for every gift set purchased, aclass was funded for a child in a conflict zone.

The skincare category was driven by two suc-cesses, Drops of Youth Eye Concentrate andVitamin E Aqua Boost Sorbet. The Drops ofYouth range is one of The Body Shops skincarepillars. The Eye Concentrate, enriched with edel-weiss plant cells, and its roll-on applicator targetearly signs of ageing around the eyes. This new

beauty gesture is already proving a winner withconsumers. The secrets behind Vitamin E AquaBoost Sorbets refreshing hydrating powers are itslightweight texture and the natural antioxidantvitamin E. True to The Body Shops philosophy,the organic soya oil at the heart of the formulacomes from fair trade sourcing.

One of this years highlights for the brand wasthe launch of the spicy Red Musk fragrance. Itspremium positioning is adding new momentumto the whole of The Body Shops Musk range.

(1) Non-governmental organisation which provides assistance tochildren in conflict areas.

1

DROPS OF YOUTHEYE CONCENTRATEYounger-looking eyeswith this anti-ageingskincare, which targetsthe eye contour.

2

CHRISTMASCOLLECTIONThe Body Shop lights upthe holidays with gift setsand limited editions.

3

VITAMINE E AQUABOOST SORBETA delightful skincarefor normal tocombination skin.

3736


40/60

60BILLION USD(1)

TRAVEL RETAIL MARKET

+7.6%TRAVEL RETAIL SALES

GROWTH (2)

LOral, as the traditional beauty leader in travel retail(3),has high ambitions for this dynamic channel, which is expected

to double in size over the next 10 years(4). LOral is the only group witha brand portfolio that covers all of the beauty aspirations

of travelling consumers, from luxury to mass-market and fromdermocosmetics to professional products, by way of The Body Shop.

VINCENT BOINAYMANAGING DIRECTOR LORAL TRAVEL RETAIL

TRAVEL RETAIL ESSENTIALS

POTENTIAL:Travel retail(5), a sixth continent for LOral, has strong growth potential.In 2014, the opening of the Haitang Bay International Shopping Complex in Chinaand a new airport in Qatar were highpoints illustrating the channels vitality.Beauty, which is the leading category in this channel(4), is changing, movingaway from multi-category stores towards specialised beauty boutiques.

GLOBAL SHOPPER:Travel retail consumers are global shoppers who buy notonly where they live but also whilst travelling. LOral has studied the destinationsfavoured by each nationality among these consumers in order to offer them apersonalised approach catered, for example, to their language and importantcultural events.(1) Source: Generation Panel, all sectors combined, 2013 sell -out. (2) Like-for-like. (3) Source: Generationdata, market share value 2013. (4) Source: Generation data. (5) Sales made in areas devoted to travellersand duty-free shops.

TRAVEL RETAIL

THE SIXTHCONTINENT


41/60

1

2

Travel retail provides an ideal showcase for thegroups brands. It helps to maximise their visibilitywith a very large audience of potential con-sumers, in particular through point-of-sale events.The channel thus plays a crucial role in buildingcustomer loyalty and recruiting new consumers,especially with a brand like KIEHLS.

Serving as a laboratory for enhancing and im-proving the customer experience, travel retaildevelops new point-of-sale services. The channelalso helps to amplify major successes, such asthe fragrances La vie est belle by LANCMEand S by GIORGIO ARMANI.LOral relies on its expertise developed over thepast 30 years, first in the luxury segment, thenwith LORAL PARISand The Body Shop,to conduct

targeted launches of all of its brands in the travelretail channel.In 2014, LOral rolled out the VICHY andLA ROCHE-POSAYbrands in dermacenters andopened up the luxury haircare category in thechannel with KRASTASE.

1

LANCME COUNTERLancmes travel retailcounters help the brandattract global shoppers

and increase the visibilityof its star products.

2

DERMACENTERSThis year, underpinned

by its travel retailexpertise, LOral launched

its dermocosmetics

brands VICHY andLA ROCHE-POSAYin the channel.

sVIEW MORE ON TRAVEL RETAILby scanning this page withthe LOral Finance app

Attractingnew consumers

3938
http://www.loreal-finance.com/eng/annual-report-2014/travel-retailhttp://www.loreal-finance.com/eng/annual-report-2014/travel-retailhttp://www.loreal-finance.com/eng/annual-report-2014/travel-retailhttp://www.loreal-finance.com/eng/annual-report-2014/travel-retailhttp://www.loreal-finance.com/eng/annual-report-2014/travel-retail


42/60

EXPERTISETO DRIVEGROWTH

Research and Innovation/42Digital/46

Operations/48

Human Relations/50

Administration and Finance/52

Corporate Social Responsibility/54


43/60

40

41


44/60

THE NEW CHALLENGES FORRESEARCH AND INNOVATION

The challenges related to sustainable de-velopment are an incredible opportunityand source of inspiration for Researchand Innovation. As part of its SharingBeauty With All initiative, LOral has com-mitted to ensuring 100% of its productshave a positive environmental or socialimpact by 2020 and the road to attain-ing that goal begins with formulation.Another challenge is connected cosmet-ics and new technologies. Within LOralsconnected beauty incubator, cosmeticresearch and digital innovations workhand in hand (see page 47). This is thebeginning of personalisation, and an im-

portant segment for the future.

RESEARCH AND INNOVATION

Inventingthe beauty of tomorrow

THE LORAL MODELOF INNOVATION

INTEGRATED:LOral Research andInnovation covers every stage, fromAdvanced Research to the market, byway of development and evaluation offormulas and products.

INVENTIVE:Scientific advances and dis-coveries go hand in hand with technicaland technological invention to providethe foundation for the LOral model ofinnovation. They constitute a crucialcompetitive and strategic advantage forthe group.

INTERACTIVE:The model also benefits

from the constant interaction of scientificexpertise and knowledge of the consumerthrough the cooperation of laboratoriesand marketing departments.

501PATENTS FILED

IN 2014

3.4%INVESTMENTS INRESEARCH ANDINNOVATION (1)

LOral has always prioritised Research. Our goal is to translatescientific discoveries into beauty products that are successful worldwide.To address the diverse range of beauty expectations found throughout

the world, we have defined regions that bring consumerstogether on the basis of skin and hair types, cultures and

beauty routines. We rely on our multi-polar structure, organisedaround our global centres in Europe and our five regional innovation hubs

in the United States, Brazil, India, China and Japan,to offer consumers the best in quality, efficacy and safety.

LAURENT ATTALEXECUTIVE VICE-PRESIDENT


(1) As % of sales.


45/60

Not long after the discovery of the microbiome was shared with thescientific community, LOral Research began work on a promisingnew cosmetics segment. In 2014, the study of these microorganismson the skins surface led to significant initial results in the field of skinallergies.

The work of LOrals researchers has revealed that the bacteria on theskins surface constitute an ecosystem that is unique to eachindividual and responsible for protecting the epidermis from externalaggressions. The new knowledge and tools developed by LOralResearch have led to a better understanding of the causes behindskin disorders and in turn support the treatments by helping to restore

the microbial balance and diversity.

A clinical study conducted by LA ROCHE-POSAYon patients sufferingfrom atopic dermatitis showed that the composition of themicrobiome changes during periods of extreme dryness, such aseczema flare-ups, with a decrease seen in the number of differenttypes of bacteria present(1). The brand has translated this discoveryinto real progress in supporting the treatment of atopic skin by placingit at the heart of its latest innovation: Lipikar Baume AP+ (see page 33).

(1) Clinical study of 49 subjects over a three-month period.

The microbiome:a groundbreaking discovery

sVIEW THE ARTICLE: SERIOXYL, AN INNOVATION IS BORNby scanning this page with the LOral Finance app

THE MICROBIOMEis a unique

ecosystem made upof bacteria on the

skins surface

43

42
http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mtime-1http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mtime-1http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mtime-1http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mtime-1


46/60

Oils:a global success storyOils are an emblematic example of how LOrals expertisetranslates into products with worldwide appeal. Their incrediblesuccess illustrates both the constant interaction between scientistsand consumers and the role played by the regional hubs,which inspire innovation and adapt products to the specificneeds of each market.

AN EXCEPTIONAL SOURCE OF INSPIRATION

For many years now, LOral has been studying beauty practices throughoutthe globe with the aim, in particular, to understand the traditional rituals that arepassed on from generation to generation. Using oils is one of these rituals.Oils are used as haircare products in India and make-up removers in Japan;every world region has its favourites: olive, coconut, macadamia, argan, etc.Everywhere they are a symbol of proximity with nature that is sought after

by consumers, and are associated with the emotional benefits from hydration,softness and nourishment, which make oils a product with remarkableinfluence on the imagination. A wealth of sources of inspiration andperformance for LOral Research.

Oils can be extracted from many

different sources, such as argan(above) and macadamia nuts (right).

Cosmetic use of oils is firmly

rooted in the beauty traditionsof many countries.



47/60

SOLUTIONS FOR EVERYONE

To ensure the global success of these new beautyrituals, LOral relies on its in-depth knowledge ofconsumers and the physiology of skin and hair,built up through the years and enriched byethnological and sociological studies conductedthrough the regional innovation hubs. For example,a study on the perception of hair oils completedin 2014 in four countries shed crucial light on

consumer expectations as related to hair type andrelationship with the product(1). It highlighted theopportunities and challenges LOral Research willface as it sets out to address these expectations.This constant dialogue between scienceand consumers will lead to the beauty productsof tomorrow.

(1) Study conducted in April and May 2014 in the US, Brazil, UK and Italy.

80 OILS ASSESSED BYLORAL APPLIED RESEARCH

To deepen scientific understanding of thebenefits oi ls provide, LOrals applied Researchteams created a company-wide platform.80 oils, mostly natural in origin, have beenstudied in detail, with more than 10,000 piecesof information recorded on their physical andchemical properties: absorption, coolness,viscosity, lightness, softness, etc. Depending onthe desired results visual, biological,

mechanical, sensorial oils are combined withone another or with specific active ingredientsto offer consumers new products that are botheffective and a pleasure for the senses. Theplatform acts as a tool kit that enables LOralto anticipate and respond to the expectationsof each consumer.

1 LOral researchers have analysed and studiedthe physical and chemical properties of 80 different oils.

2 SHU UEMURAs make-up removing oils are renownedfor their cleansing and moisturising properties.

3 Six rare flower oil micro-extracts are at the heart of theElvive Extraordinary Oil range.

1

sLISTEN TO THE AUDIOCAST ON THE GLOBAL SUCCESS OF OILSby scanning this page with the LOral Finance app

2

3

44

45
http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mc-3http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mc-3http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mc-3http://www.loreal-finance.com/eng/annual-report-2014/research-innovation#mc-3


48/60

DIGITAL

Becomingthe leader in digital beauty

As the worlds leader in beauty(1), LOral aims to become the leaderin the digital beauty field as well, particularly in terms of customer engagement,

experience and emotional connections. We are committed to accompanyingconsumers in their online purchases, and to pairing our products

with digital beauty services. The digital revolution has also changed the waywe work, and we rely on both collaborations with expert partners,

in order to capitalise on their expertise; and, at in-house level,our teams ability to quickly get up to speed, in order to bring all

of the groups professions into the digital age.LUBOMIRA ROCHET

CHIEF DIGITAL OFFICER

LORALS DIGITAL STRATEGYE-COMMERCE:Today, most consumers research products on the Internet beforedeciding on a purchase, and increasing numbers of them want to buy cosmeticsproducts online. LOral is changing its distribution practices to accommodatethese new behaviours.

PERSONALISATION:Thanks to advances in data technology, our marketing teamsnow have better knowledge and a more precise understanding of consumers.With this new information, they are able to offer the products and services bestsuited to their expectations.

DIGITAL LOVE BRANDS:The digital world is a new field for creation and innov-ation. It is an invitation to the groups brands to reinvent the way they communicatewith their consumers. It of fers multiple channels for expression and the opportunity

to foster closer relationships based on emotional connections and interaction.

+86.7%

15.7%

GROWTH OF

E-COMMERCEIN CHINA(2)

OF MEDIA SPENDINGON DIGITAL


(1) Source: Beautys Top 100 WWD, August 2014. (2) Like-for-like, inc luding distributor feedback and LOralestimates.
http://www.loreal-finance.com/eng/annual-report-2014/digital#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/digital#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/digital#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/digital#video-type-1http://www.loreal-finance.com/eng/annual-report-2014/digital#video-type-1


49/60

sVIEW THE ARTICLE: E- COMMERCE: A MAJOR ASSET FOR LORAL IN CHINAby scanning this page with the LOral Finance app

Digital technology continues to revolutionise the beauty market,in terms of distribution, products and services. To imaginethe consumer experience of tomorrow, LOral Research and Innovationhas created an innovation incubator for connected beauty in SiliconValley in the United States. The goal is to pair the groups cosmeticsknowledge with avant-garde technologies to invent the productsand services of the future.

Makyaj.com, which was launched in Turkey in September, is a successfulexample of the groups content-driven digital strategy in the make-upsegment, which attracts large numbers of young, connected

consumers. By publishing articles on the subjects most searched for onthe Internet, this innovative online magazine not only wins over newcustomers but it also serves as a showcase for the brands. The websitehas many strengths: it has developed partnerships with local media andbloggers to further boost its popularity, and incorporated links to themajor Turkish e-commerce websites. A 100% digital experience, from thefirst impression of a product through to purchase.

The dawn of a new era:

connected beauty

MAKYAJ.COMIn Turkey, this site is the

reference for consumerslooking for onlinemake-up content andadvice. A 100% digitalexperience, all the waythrough to purchase.

47

46
http://www.loreal-finance.com/eng/annual-report-2014/digital#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/digital#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/digital#mrc-2http://www.loreal-finance.com/eng/annual-report-2014/digital#mrc-2


50/60

OPERATIONS

THREE PILLARS OF PERFORMANCEPRODUCT DEVELOPMENT AND SOURCING:Design-to-cost know-how, targetedand efficient sourcing, and numerous packaging innovations together enableOperations to meet each brands specific product development needs.

MANUFACTURING: To ensure flexible production at the best cost, LOral haschosen to have each factory specialise in a limited number of technologies. Thisboosts the groups technological expertise, increases productivity and improvesproduction costs.

DISTRIBUTION TO POINTS OF SALE:With a Supply Chain(2)that is integrated fromsupplier to sales outlet and continuously upgraded through expertise and theroll-out of new information systems, Operations continue to intensify their targeteddistributor-centric approach.

(1) Ope

Documents

Loreal Annual Report 2014 Eng