www.bwconfidential.com The inside view on the international beauty industry August 27 - September 23, 2015 #116 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL Comment Inside The buzz 2 Traveling well News roundup ravel retail has been singled out as one of the most Netwatch 7 Tinnovative distribution channels for beauty for some time, and one that domestic retailers should look to for inspiration. Social media monitor This idea was reinforced over the summer with a flurry of new creative concepts in the channel. Interview 8 Qatar Duty Free, for example, teamed up with L’Oréal Luxe Estée Lauder Companies svp Latin to launch a pop-up store called When East meets West at America Daniel Rachmanis Hamad International Airport in Doha. The pop-up is conceived as a luxury showcase for oriental and Western fragrances from Insight 11 five of L’Oréal’s brands. Meanwhile, LVMH-owned retailer Spain’s beauty market Sephora made its debut in travel retail at Abu Dhabi International Airport with a pop-up store stocking its private-label brand. Bulgari too, has said it will launch a pop-up store Store visit 14 in October at Charles de Gaulle Airport, Paris that will focus on the link between the L’Oréal Dermacenter, Paris brand’s jewelry and fragrances and put the spotlight on its most prestigious fragrances. This comes on top of more permanent initiatives at some of the industry’s key operators, such as DFS’ new T Galleria beauty-only stores or LS Travel Retail’s Amuse Beauty Studio, which aims to make beauty more personal through special services. All these efforts illustrate travel retail’s growing role as a showcase for beauty—a role similar to that fulfilled by department stores in the past. It also has analysts asking when domestic retailers will begin to show the same level of experimentation and interest in coming up with more creative shopping environments. Meet the BW Confidential Oonagh Phillips team at: Editor in Chief [email protected] l MakeUp in New York, Sept 9-10 l Beyond Beauty Paris, Sept 15-17 l Cosmopack New York, Sept 16-17 l Cosmetic 360, Paris, Oct 15-16 l TFWA World Exhibition, Cannes, Oct 18-23 l LuxePack Monaco, Oct 21-23 News headlines daily on www.bwconfidential.com @BWCbeautynews l Cosmoprof Asia, Hong Kong, Nov 11-13 News roundup At a glance... n Lagardère Travel Retail to acquire Paradies n Dufry closes 50.1% acquisition of stake of World Duty Free The buzz n Sephora makes travel-retail debut n Neiman Marcus to launch IPO n P&G appoints new ceo Stay informed with our daily news headlines on www.bwconfidential.com Retail France-based Lagardère Travel Retail has signed a deal to acquire North American airport travel retailer Paradies for $530m in cash from Freeman Spogli & Co, the Paradies family and other shareholders. Paradies operates in more than 76 airports in North America. In its fiscal year ended June 28, 2015, Paradies generated sales of $515m. Combining the activities of Lagardère Travel Retail in North America and Paradies would create the second-largest player in North America. The newly combined company would have sales close to $800m and a presence in around 100 airports. Lagardère said the deal would result in significant savings, which could reach $15m per year from the fourth year after the acquisition. Gregg Paradies, president and ceo, would remain at the helm of the new company. Lagardère says the reach of Paradies is complementary to its own operations in the region, where it has a strong presence in Canada and several international US airports, including New York-JFK and Los Angeles. Swiss travel retailer Dufry has closed the acquisition of the 50.1% stake of World Duty Free (WDF) from Edizione. The deal was approved by all relevant antitrust authorities. Dufry is now preparing the mandatory tender offer for the remaining 49.9% of WDF’s shares. Dufry started to fully consolidate WDF from August and integration is planned to follow shortly afterwards. Dufry expects to generate savings €100m per year. The acquisition of WDF gives Dufry a 24% share of the airport retail market globally. LVMH-owned retailer Sephora has made its debut in travel retail at Abu Dhabi International Airport. Sephora will open two pop-up stores in terminal 1 and terminal 3 between August 1 and October 31 in partnership with Abu Dhabi Duty Free and LVMH- owned travel-retailer DFS. The stores will stock the private-label range Made In Sephora. In other news, Sephora announced its move into the beauty box subscription market in the US this fall. The retailer’s box, called Play! By Sephora will cost $10 per month and will contain five deluxe-size prestige products. Each box is curated around a specific theme. In addition to product, the box includes a Play Book, which offers application tips and information about each item in the box. Included in the Play Book is a Play Pass, a card offering personalized one-to-one tutorials at a Sephora store, where consumers can learn about the products in their box from the retailer’s staff. Sephora will begin the box service in a limited number of cities in September, with a full US launch in early 2016. n n n www.bwconfidential.com - August 27 - September 23, 2015 #116 - Page 2 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup n n n Travel-retail operator Qatar Duty Free has launched a fragrance pop-up store in collaboration with L’Oréal Luxe at Hamad International Airport, Doha. The pop-up store, called When East Meets West and located in the airport’s departures concourse, showcases fragrances from five L’Oréal brands: Lancôme, Giorgio Armani, Yves Saint Laurent, Ralph Lauren and Viktor & Rolf. Each of the brands shows oriental and Western- The buzz style fragrances. The pop-up shop also offers a bottle engraving service. Bulgari is to open its first fragrance pop-up store in Paris at Charles de Gaulle airport in October. The store will be located at terminal S4 and will be open from October 1-31. The store is designed to be what Bulgari calls a jeweler’s temple and evoke the brand’s history. It will focus on the links between Bulgari’s jewelry and fragrance and feature the brand’s most prestigious perfume collections, including Eau Parfumée and Le Gemme. Bulgari’s new fragrance Goldea will also be on show. An oval counter at the center of the store will present interactive animations. The store will offer a tea ceremony with four types of tea: green, white, red and blue, which correspond to fragrance notes. Consumers will also be encouraged to explore the world of gold. AS Watson has opened a Watsons flagship store in Hong Kong. The 8,000ft2 (743m2) three-story store is located on Yun Ping Road in Causeway Bay and is the largest Watsons store in Hong Kong. The health and beauty store stocks more than 8,300 products, including 840 healthcare and beauty brands, of which 250 are Watsons exclusives. Last year, AS Watson opened and refitted 76 stores in Hong Kong and this year, the number is expected to come to over 80. The investment involved is HK$620m (US$80m) over two years. The group plans to open 1,300 new stores this year in different markets. US-based prestige department store Neiman Marcus is to list on the stock exchange after 10 years of private ownership. Proceeds from the IPO will be used to repay some of the company’s $7.4bn in debt. Neiman Marcus was taken private by a private-equity consortium led by Texas Pacific Group (TPG) and Warburg Pincus in 2005. In 2013, TPG and Warburg Pincus sold Neiman Marcus to Ares Capital and the Canadian Pension Plan Investment Board for $6bn, choosing a sale over an IPO. The company operates 41 Neiman Marcus stores and two Bergdorf Goodman stores. Estée Lauder Companies-owned MAC Cosmetics opened a flagship store in São Paulo, Brazil in July. The 117m2 (1,259ft2) store is located in the city’s famous Paulista Avenue and is the brand’s 48th and biggest boutique in Brazil. The store is based on the brand’s new-generation design, which includes a color wall featuring beauty looks and and make-up lessons, which are either free or given when a shopper buys R$90 (US$25.89) of product. The store sells a total of 1,800 skus. Strategy French flavor and fragrance company Mane has invested $1.5m in a new creative center in São Paulo, Brazil to strengthen its position in the country and Latin America. The new 1,500m2 (16,146ft2) center is housed in a state-of-the art business complex in the city. n n n www.bwconfidential.com - August 27 - September 23, 2015 #116 - Page 3 CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL News roundup n n n Results Estée Lauder Companies (ELC) reported a 7.6% decline in net sales to $2.52bn for its fourth quarter 2015, due in part to accelerated retailer orders in the same quarter of fiscal The buzz 2014, which created an unfavorable basis for comparison, and to currency fluctuations. Adjusting for the impact of the accelerated orders, net sales in constant currency for the quarter would have increased 7%. Net profit for the period was down 40% to $153m. For the full year, net sales fell 2% to $10.78bn. Sales were hit by the strength of the US dollar. Excluding the impact of foreign currency translation, net sales increased 3%. Net profit was down 9.2% to $1.09bn.