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Cosmetics Are Part Of The
Universal Quest For
Beauty
As a form of self expression,
they are personal in the fullest
sense - just as they are part of
social life, serving a daily need
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are fully committed to meeting
that need, putting all our expertise and research resources to
work for the well-being of men
and women, in al their diversity,
around the world. That committment is what gives meaning to
our business.

LOreal achieves 7 out of 9

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Beauty for All
At LOreal, we are fully committed to meeting the need for high quality cosmetLFVWRPDNHEHDXW\XQLYHUVDOLQDVDIHHIFLHQWDQGVXVWDLQDEOHZD\SXWWLQJ
all our expertise and research resources to work for the well-being of men and
women, in all their diversity, around the world. For that purpose we strive to
JURZE\RSHQLQJXSWRHPHUJLQJPDUNHWVH[SORULQJQHZVFLHQWLFDQGWHFKQRlogical territories while ensuring that each of our employees had the opportunity to develop his or her potential growth.
That committment is what gives meaning to our business.

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Millions
\WV]LY3@
Net Sales
Cost of Sales
Gross Profit
Research & Development
Advertising and Promotion
Selling, general & administrative expenses
Operating Profit
Other income and expenses
Operational Profit
Finance costs on gross debt
Finance income on cash and cash equivalents
Finance costs, net
Other financial income (expenses)
Sanofi-Aventis dividends
Profit before tax and non-controlling interests
Income tax
Net Proft
attributable to:
-owners of the company
-non-controlling interest
Earnings per share attributable to owners of the company

2010

2009

2008

19,495.8
-5,696.5
13,799.3
-664.7
-6,029.1
-4,048.6
3,056.9
-153.2
2,903.7
-43.8
17.2
-26.6
-9.0
283.8
3,151.9
-909.9
2,242.0

17,472.6
-5,161.6
12,311
-609.2
-5,388.7
-3,735.5
2,577.6
-277.6
2,299.9
-92.0
16.0
-76.0
-13.0
260.1
2,471.0
-676.1
1,794.9

17,541.8
-5,187.2
12,354.6
-587.5
-5,269.1
-3,773.4
2,724.6
-156.3
2,568.3
-208.8
34.6
-174.2
-7.2
244.7
2,631.6
-680.7
1,950.9

2,239.7
2.3
3.82

1,792.2
2.7
3.07

1,948.3
2.6
3.31

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Millions

12.31.2010 12.31.2009 12.31.2008

Non-current assets
Goodwill
Other intangible assets
Tangible assets
Non-current financial assets
Deferred tax assets
Current assets
Inventories
Trade accounts receivable
Other current assets
Current tax assets
Cash and cash equivalents
PUJYLHZL]Z
Total

17,048.2
5,729.6
2,177.5
2,677.5
5,837.5
626.1
6996.3
1,810.1
2,685.2
846.0
104.5
1,550.4
24,044.5

17,350.4
5,446.0
2,042.4
2,599.0
6,672.2
570.8
5,941.1
1,476.7
2,443.3
732.8
115.2
1,173.1
23,291.5

16,380.3
5,532.5
2,038.2
2,753.3
5,557.4
498.9
6,526.5
1,635.5
2,694.6
985.8
133.6
1,077.1
22,906.9

Equity
Non-current liabilities
Current liabilities
Accounts Payable
Provisions for liabilities and charges
Other current liabilities
Income tax
Current borrowings and debt
Total

14,865.8
2,596.6
6,582.1
3,153.5
536.9
1,958.1
166.6
767.0
24,044.5

13,598.3
4,306.6
5,386.5
2,603.1
510.0
1,750.5
133.2
389.7
23,291.5

11,562.5
3,978.0
7,366.4
2,656.6
431.1
1,848.4
159.7
2,270.6
22,906.9

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Critical Success Factor

Advertising
Product Quality
Innovation
Price Competitiveness
Management
Market Share
Global Expansion
Distribution
Customer Loyalty
Financial positioning
Product Selection
Social Responsibility
Total

Weight
0.15
0.1
0.05
0.1
0.1
0.1
0.05
0.05
0.1
0.1
0.05
0.05
1

L'Oreal
P&G
Avon
Estee Lauder
Rating Score Rating Score Rating Score Rating Score
4
0.6
4
0.6
1
0.15
3
0.45
3
0.3
3
0.3
4
0.4
4
0.4
4
0.2
2
0.1
2
0.1
3
0.15
3
0.3
3
0.3
3
0.3
2
0.2
3
0.3
3
0.3
4
0.4
3
0.3
4
0.4
3
0.3
2
0.2
2
0.2
3
0.15
2
0.1
3
0.15
3
0.15
3
0.15
3
0.15
2
0.1
2
0.1
3
0.3
2
0.2
4
0.4
4
0.4
4
0.4
3
0.3
4
0.4
4
0.4
4
0.2
4
0.2
4
0.2
4
0.2
4
0.2
4
0.2
4
0.2
4
0.2
3.5
3.05
3
3.15

LIQUIDITY
Current Ratio
Quick Ratio
LEVERAGE RATIOS
Debt to Assets Ratio
Debt to Equity Ratio
Long Term Debt to Equity Ratio
ACTIVITY RATIOS
Inventory Turnover
Fixed Assets Turnover
Total Assets Turnover
Accounts Receivable Turnover
PROFITABILITY RATIOS
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Assets
Return on Equity
Earnings Per Share
Price Earnings Ratio (MS based on
11/08/10)
GROWTH RATIOS
Sales
Net Income

L'OREAL

AVON

REVLON

ESTEE LAUDER

1.0x
0.6x

1.4x
0.7x

1.5x
0.7x

1.8x
1.1x

0.4x
0.6x
0.06x

0.8x
4x
1.5x

1.6x
(3)x
(1.7)x

0.6x
4x
0.4x

3 Days
7 Days
Under1 Day
6 Days

3 Days
7 Days
1 Day
14 Days

3 Days
13 Days
1 Day
7 Days

2 Days
8 Days
1 Day
7 Days

70.80%
15%
11%
7.92%
15.76%
$3.79

63.52%
10%
6%
10.25%
43.96%
$1.39

64.95%
14%
25%
12.91%
-37.28%
$6.26

78.49%
16%
6%
14.17%
34.25%
$2.38

21

31

12%
25%

6%
-3%

2%
571%

13%
47%

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,QGXVWU\5HJXODWLRQV
 Self Regulation by CTFA (Cosmetics Toiletry Fragrance Association)
 Manufacturers responsibility for customer safety
 FDA regulates labelling and inspects manufacturing facilities
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 Container cant contain poisonous material

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ingredients
 Ingredients
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What can a product contain?

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 cannot contain decomposed
ed substance
ary conditions where there is no contamination
 must be packaged in sanitary
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 container cannot contain poisonous

:0;<(;065(5(3@:0:!7VY[LYZ-P]L4VKLS
LOreals competitive advantage is product differentiation

1. SUPPLIERS
Bargaining Power of suppliers HIGH

low

med

high

2. SUBSTITUTE PRODUCTS
Potential development of substitute products - MEDIUM to LOW

low

med

high

3. COMPETITORS
5LYDOU\DPRQJFRPSHWLQJUPV - HIGH to MEDIUM

low

med

high

Bargaining Power of suppliers at LOreal - LOW

low

med

high

:0;<(;065(5(3@:0:!7VY[LYZ-P]L4VKLS

4. BUYERS
Bargaining power of consumers/buyers - MEDIUM to LOW

low

med

high

low

med

high

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- Age 16 to 60 years old
- Middle to upper class
- Higher education, and cultural knowledge
- Higher income level
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- Man and woman, the majority of women
- Have leisure time
- Is critical, and informed consumer
- Not afraid to complain, not tolerant of mistakes and failures in
products

5. ENTRY OF NEW COMPETITORS

Potential entry of new competitors - LOW

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Advanced research and development on ethnic skin types

Ability to venture into untapped markets

Cutting edge technology and constant innovation

Brand management

Ability to reduce debt to equity ratio by 14.1% in a year

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 Strong brand image and brand

awareness locally, and internationally.
 Knowledge of different cultures and
rituals worldwide and so can adapt its
products.
 Portfolio of international brands: more
markets.
 Strong advertising
 Diversity of beauty products to answer
the needs of more markets.
 Positive social responsibility image.
 Custom-tailored individual training of
employees through Internet platform

:
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control
 Weak in the North American market: smallest
production and sales
 Decentralized company structure means hard to
control: slows down company production and weaken
image.
 Hard to know who is accountable for problems with all
these different brands in one company.
 Worldwide marketing strategy that adapts product and
advertising to the culture: blurs image of company.
 Continuous innovative ideas and products required:
high R&D costs, and so high risk

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 Market development in untapped countries such as
Korea and the Middle East
 Technological advancement creates new markets and
advertising medium opportunities: social media, online
website
 Growing aging market in Western countries
 Growing markets in developing countries of Asia:
aspiring customers
 Male growing interest in beauty
 Growing concern for UV protection and minimizing
aging
 Growing concern for environmentally friendly products

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 Trend towards cosmetic surgery has increased with
TV shows etc
 Image of beauty if changing towards a more natural,
makeup free look
 Lingering recession and slow economic growth:
reduced consumer spending
 :DUVDQGFRQLFWVLQGHYHORSLQJFRXQWULHVPDNHVLW
hard to approach those markets
 Increase government policies and regulations on
cosmetics may increase prices.
 ([FKDQJHUDWHXFWXDWLRQV
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 Economies of scale
 Knowledge and adaptation to culture
 Attract investors from new markets
Disadvantages and Costs
 ([SHQVLYHPDUNHWUHVHDUFKEHIRUHHQWHULQJWKHPDUNHW
 Market and government regulations
 Increase transportation and distribution costs
 Risk of failure to meet demand of new markets

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 Improve the image of LOreal and brand awareness
 Increase male market share
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Disadvantages and Costs
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 Risk of blurring image of the company
 Cost of heavy advertising

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 Will give competitive advantage over companies that do not possess several brands
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Disadvantages and Costs
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