Jean-Paul Agon on Inventing a New L’Oréal

PARIS — At L’Oréal’s annual general meeting held Tuesday the group’s next leader, Nicolas Hieronimus, was confirmed, and a sweeping overview of the company’s evolutions and revolutions over the past 15 years, under Jean-Paul Agon, was shared.

During the meeting, which was livestreamed from L’Oréal headquarters in the Paris suburb of Clichy, it was revealed that 99.21 percent of company shareholders had voted in favor of Hieronimus joining the group’s board of directors.

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Then following the AGM, the board appointed Hieronimus, currently deputy chief executive officer, in charge of divisions, as the company’s sixth CEO in its 112 years of existence, starting May 1. The board also decided that Agon, who has led the group since 2006, will continue to be L’Oréal’s chairman.

Both nominations were expected.

“I’m very confident at a time that I entrust to Nicolas Hieronimus the task of writing the next chapter of the great history of L’Oréal as of the first of May,” Agon said. “His track record in the company was a standard-setter, and gives him full legitimacy.”

Agon lauded Hieronimus’ “combined sensitivity to the needs and expectations of consumers, clear understanding of current trends, a passion for marketing, innovation and an obsession for excellence.”

“Lastly, and it’s key, he is a great team captain, an inspiring leader possessed of great energy for all these reasons,” Agon said. “I’m firmly convinced that he’s the best man to head your company. In the years to come, he will lead L’Oréal to new heights in full continuity with our strategy and values, whilst reinventing the group and adapting it to the great challenges of the world.”

Agon described this AGM as very special, since it would be the last at which he’d address shareholders as L’Oréal’s CEO. The executive outlined some key changes over the past 15 years, saying the company in 2006 was not the same as it is today.

“The group is far better balanced,” Agon said. “The center of gravity in terms of [L’Oréal’s geography] has shifted to the New Markets that represent almost half of our sales, in particular Asia Pacific, that’s become our number-one geography.”

China symbolizes the region’s steep growth trajectory.

“Fifteen years ago, it ranked ninth in our markets,” Agon said. “It’s now in second place. Our ambition is immense in this country that’s ready to become the world’s largest beauty market.”

Versus 15 years ago, L’Oréal is better equipped in terms of businesses and channels, too. In 2006, hair care was the company’s number-one product category.

“Today, skin care is the biggest and most dynamic category,” Agon said. “In terms of channels, the weight of our two largest divisions — Consumer Products and Luxury — are almost identical.”

The same is true for L’Oréal’s Professional Products and Active Cosmetics Divisions.

Under Agon’s lead, L’Oréal has enriched its portfolio through some 30 acquisitions, including of the Yves Saint Laurent, Prada and Valentino licenses in prestige fragrance, and Sanoflore and Logocos Naturkosmetik in the natural beauty space.

He maintains L’Oréal “brings together the best in the beauty universe.”

“L’Oréal has also changed scope in the financial and economic sense over 15 years,” Agon explained. “Sales almost doubled; profitability grew continuously and steadily, going from 15.6 [percent] to 18.6 percent of sales, and net profit was multiplied by 2.5, coming in at over 4 billion euros.”

Further, the group’s share price has leapt by more than 350 percent, and its market capitalization has quadrupled, to close to 200 billion euros. The executive underlined that L’Oréal has entered into the select club of the world’s 50 leading companies.

“Total shareholder returns are high — 13 percent over 15 years, 16 percent over 10 years and over 20 percent over three years,” Agon said. “If we’ve obtained such results, it’s because we began by defining a mobilizing strategic project for L’Oréal with the new mission Beauty for All, a self-renewed ambition to attract 1 billion new consumers, a new strategy — ‘universalization,’ that’s to say globalization [while] showing respect for differences.

“Lastly, we presented last year a new purpose: creating beauty that drives the world,” he said. “If your company has constantly strengthened its global leadership, it’s because we’ve devoted these past 10 years to inventing a new L’Oréal. We conducted in-depth transformations that were going to prove indispensable revolutions to succeed in the 21st century.”

The first of those he called “the digital and e-commerce revolution,” an opportunity accelerator.

“Our online sales were nonexistent 10 years ago. They accounted for over 7 billion euros in 2020,” said Agon, adding e-commerce is now the number-one market for L’Oréal, generating 27 percent of group sales.

“We emerged in less than a decade as the beauty e-commerce leader,” he continued. “We also reinvented our marketing model, thanks to data, social networks and over two-thirds of media spend.”

L’Oréal was the first consumer-goods group to acquire a company specialized in artificial intelligence and virtual reality: ModiFace, in 2018, which offers personalized beauty services and experiences for consumers. In 2020 alone, 1 billion virtual makeup tests, skin diagnostics and bespoke recommendations for L’Oréal products were made through the application.

“Our ambition is very soon to become the absolute champion of beauty tech,” Agon said.

Corporate responsibility and sustainability comprise L’Oréal’s second revolution.

“The protection of the environment was already a reality at L’Oréal, but we wanted to take it to the next level by launching in 2013 the program Sharing Beauty With All,” he said. “With this program, we’ve achieved a step change in the paradigm, from supply to packaging, marketing, formulation and production. It’s the full value chain that was upended in seven years.

“We reached the majority of the goals in this exacting program, and we’re going to exceed some very ambitious [ones], such as CO2 reduction. But we firmly believe we need to go further,” Agon said.

The group’s new sustainability program, L’Oréal for the Future, was launched during the coronavirus pandemic and represents an even more radical transformation the company wants to implement. It was conceived to respect the limits of planet Earth across the lifecycle of the company’s products.

“We’re going to devote 150 million euros to support vulnerable women and the environment — two causes that reflect the historic values and commitment of our group,” Agon continued.

On the personnel front, L’Oréal’s Share and Care program, launched in 2013, helped universalize best social practices and served as a model for the International Labor Organization.

“Thanks to it, our employees in 68 countries where we’re present benefit from the best standards in terms of health, parenthood and quality of work,” Agon said.

L’Oréal has intensified its efforts regarding diversification and inclusion, as well, with major improvements, especially on the gender equality front, for instance.

“We have strong, exacting ethical principles that guide our work,” said Agon, adding L’Oréal has been acknowledged for its actions. It is the only company around the world to have received a triple-A score from the CDP, for example.

In 2016, L’Oréal initiated its third revolution in the form of the Simplicity program, created to change the way the company works to meet new employee expectations.

Agon said if the group has been able to reinvent itself and adjust to major changes in the 21st century through such revolutions, it’s due to the fact that L’Oréal remains loyal to its identity with one main focus: the business of beauty.

“Only beauty, but all of beauty: The primacy of research to meet the need for extra quality, effectiveness, safety, responsibility; a balanced business model that creates value with a strong, solid financial situation; priority to people in social harmony, based on a bedrock of humanist and ethical principles, and a strong and unique enterprise,” he said.

Agon explained the transformations and reinventions have “made L’Oréal stronger, better equipped than ever to win, and make us very confident in the future.”

“This great confidence also comes above all from the quality and tremendous commitment of each of the 85,000 people working at L’Oréal,” he said. “If L’Oréal is the efficient and civic company that it is today, it’s thanks to them.”

For more, see:

L’Oréal Q1 Sales Beat Expectations

A Snapshot of Nicolas Hieronimus, L’Oréal’s Next CEO

Nicolas Hieronimus Named L’Oréal CEO

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