L'Oréal Boycott

16 October 2006 - Shares of L’Oréal fell as much as 3.3% as analysts cut their rating on the stock, saying market conditions will be tougher for the new owners of Body Shop.

Goldman Sachs said: ' We believe the personal care environment is becoming more difficult owing to heightened competition and more discerning customers.'

L’Oréal chief executive officer Jean-Paul Agon said in a statement on the company’s website that he confirms the company’s full-year sales and profit targets.

L’Oréal shares fell 2.25 euros or 2.8% on 75.5 euros on the news.

L’Oréal announced that sales results for the Body Shop showed a global increase of 8.8% from July to September, with Latin America and Eastern Europe showing 16% and 21% sales increases, but very weak sales in western Europe and the USA where discerning consumers are aware of L’Oréal animal testing which is subject to consumer boycotts.

This leaves the all important UK Body Shop market with very disappointing sales growth since it was acquired by L’Oréal in March this year. This is despite heavy promotional discounting in the UK Body Shop stores during the last six months.

In the lead-up to the vital Christmas trading period, the Body Shop will find it very tough going according to analysts. Last year the Body Shop had to issue a profits warning on lower than expected Christmas sales – resulting in a 20% drop in its share price. This year the Body Shop has the additional problem of its image – which has suffered badly since its sell-out to L’Oreal. According to a BrandIndex rating by YouGov, the company's 'buzz' rating, as well as 'satisfaction' level, has fallen significantly since the acquisition. The poll results found that the Body Shop's 'buzz' rating had fallen 10 points to -4 since the start of March, while 'satisfaction' rating levels declined from 25 points to 14.

In an attempt to try and address Body Shop sales, L’Oréal has just announced Philip Clough as the first ever global brand director of the Body Shop. Clough will officially start at the Body Shop in December and is a current L’Oréal employee. Since its acquisition of Body Shop six months ago, L’Oréal has removed virtually the entire existing Body Shop board and replaced it with L’Oréal employees.

Back to L'Oréal Boycott Archive