| L'Oreal sales - are they really worth it? |
The dreaded credit crunch strikes again
.jpg "L'Oreal") The last quarter of 2008 showed the true colours for L'Oreal - sales were worse then expected with like for like sales down 0.6% for the three months ending December 2008. Actual profits also suffered with net profit down 27% on 2007 to 1.9billioin Euros but sales were up 1.1% reflecting an ever tightening squeeze on margin for the hair and beauty giant. Original targets of sales increases for 2009 are now revised downwards from 6-8%to just 4% which still seems high relative to the general doom and gloom on retail and high street sales. Luxury products are under threat; the general dumbing down of consumer luxury brand continues with sales of Lancôme creams (which account for almost 25% of sales and hair salon products were the most severely affected. Sales of Body Shop were also hit hard with sales declining each quarter of 2008 - it's a difficult time for Body Shop the darling of the high street for ethically produced products. The original founder of Body Shop was the iconic Anita Roddick who sold out to L'Oreal in November 2006 however she was still a major presence on the board until her unexpected death in September 2007; since that date the label has very much lost its way. Another area of concern is the reduced business and personal travel commitments of customers having a resulting reduction in duty free sales. Certain highlights of L'Oreal include Garnier and Maybelline Mascara; both have extensive advertising budgets with aggravating catch lines. Sales in North America fell 11.3% and in Western Europe 1.9% as retailers reduced stock commitments. Everyone knows L'Oreal and its carefully positioned brand is a well known name within fashion circles. Fro the past 20 years L'Oreal has been one of consumer goods most successful companies but now that business model is under review. 80% of American sales are via the departmental stores and they are currently being hit hardest. Its time for a rethink at L'Oreal and perhaps a new strap line wouldn't go a miss too!
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