April 15, 2019: Elisabeth King reports on this week’s business news

Foreo rumoured for sale with US$1 billion price tag; biggest monthly slump on record for Australian online sales; Fenty and icon brands drive double-digit growth for LVMH in Q1; and French private equity firm buys Scandi beauty favourite.

Foreo rumoured for sale with US$1 billion price tag
In only six years, tech innovator Foreo has grown from a Swedish startup to a US$1 billion a year global business. At the 2018 CES event in Las Vegas, the world's biggest electronics fair, Foreo was named one of the top four disruptor brands across industries, alongside Netflix, KIA and Intel. Worldwide, one of Foreo's facial and oral devices such as the best-selling Luna mini 2 and UFO is sold every three seconds.

The brand launched in Australia in 2014 and became the number one skincare brand in Sephora in 2017. An explosive success that quickly spawned lower-priced clones and dupes. Clarisonic, which kicked off the craze for sonic cleansing brushes, put itself up for sale seven years after its launch in 2004 and was acquired by L'Oréal. Foreo is also rumoured to be seeking buyers, according to business tracker and analyst Bloomberg. Private equity firms are tapped to be among the most interested parties if a sale goes ahead and the likely price tag will be around US$1 billion.

Biggest monthly slump on record for Australian online sales
Australian bricks-and-mortar retail sales in the 12 months to January this year totalled $321.54 billion, reports the Australian Bureau of Statistics. By contrast, Aussies forked out $28.92 billion on online purchases in the year to February, says NAB.  But the NAB Online Retail Sales Index revealed a 3.4 per cent slump in seasonally-adjusted figures for February – the biggest monthly drop on record.

All categories experienced downturns, led by the largest homewares and appliances sector. Fashion sales displayed "the least negative growth", partly because of the popularity of BNPL (buy-now-pay-later) payment methods such as Afterpay. Grocery, liquor and media sales showed the biggest average spending falls. On a brighter note, department store sales and takeaway foods enjoyed the biggest gains in average spending. In other good news, the NAB index reports that domestic online retailers put in a better performance month-on-month than their international rivals.

Fenty and icon brands drive double-digit growth for LVMH in Q1
LVMH, the world's largest luxury goods group, has credited Rihanna's Fenty Beauty and Christian Dior as leading drivers of a 12 per cent lift in reported perfume and cosmetic sales to 1.687 billion euros (AUD$2.66 billion) in Q1 2019. Fenty Beauty has now expanded to Saudi Arabia, in addition to the US, the UK and Australia and 15 other countries through fentybeauty.com. The Rouge Dior, Dior skincare ranges and the latest fragrance launch, Joy, also put in a "remarkable performance", reports the fashion and beauty titan.

Sephora and the DFS travel retail group, the mainstays of LVMH's Selective Retailing Division, produced an 8 per cent uplift in global revenues to 3.5 billion euros (AUD$5.52 billion) over the period as global travel retail continues to boom.

LVMH's total net sales reached 12.538 billion euros (AUD$19.5 billion) in Q1 2019 – a rise of 16 per cent over the same period last year. All geographic regions experienced good growth. The multinational's biggest moneyspinner, the fashion and leathergoods division, reached 5.1 billion euros (AUD$8.04 billion) – an increase in organic sales of 15 per cent – following record growth of the Louis Vuitton icon brand across all sectors of its business.

French private equity firm buys Scandi beauty favourite
Scandi beauty from Sweden, Denmark, Norway, Iceland and Finland is very much focused on skincare designed to deliver clean-as complexions. Hygge, the Danish concept of warmth and cosiness, had its day in the sun. Lagom, which translates as the Goldilocks-style "not too much, not too little", has become the Nordic word-du-jour, covering all aspects of living including skincare. Fortunately, it closely tracks the clean beauty phenomenon.

Experienced Capital Partners, a Paris-based private equity firm, has taken a majority 51 per cent stake in Swedish cosmetics brand L:A Bruket. The company's previous investments have targeted French fashion and interiors brands, including premium shirtmaker, Alain Figaret.

Founded in 2008 by Monica Kylen and Mats Johansson, L:A Bruket is sold online in Australia and offers more than 100 spa-inspired SKUs across skincare, bodycare and homewares. Distributed in over 50 countries, the brand has an annual turnover of 5 million euros (AUD$7.89 million). The acquisition of a controlling stake by Experienced Capital Partners will spur global expansion and rev up digital development.

Snippets from the Wires

  • Sit back and relax is the standard airline pilot's instruction before takeoff. Travellers from Sydney International Airport certainly will after enjoying a La Prairie treatment at counter or in a private suite. In a world-first, the Swiss luxury skincare brand has teamed with Heinemann Australia to offer the new Art of Luxury Concept to travellers who purchase any La Prairie product. The indulgent service will be available from this week to September.
  • Industry observers have hailed CBD (cannabidiol/hemp) beauty as the most important trend of the decade. According to Future Market insights, global sales of CBD skincare products will reach US$645 million by the end of the year. The hero product of the category is oil.
  • AmorePacific, one of South Korea's big two beauty giants, is launching Laneige, one of its best-selling prestige skincare brands, in Europe. In an exclusive with Sephora, the brand will be available in 800 stores in 18 European markets, including France, Russia, Spain, Italy and Germany.
  • The Middle East and Africa (MEA) beauty and personal care market soared to US$32.4 billion in 2018. Beautyworld Middle East will be held in the Dubai International Convention and Exhibition Centre early this week. Featuring more than 1750 exhibitors from 62 countries, it's the largest-ever edition of the annual showcase.
  • According to a survey by Piper Jaffray, Ulta surpassed Sephora for the first time as the favourite beauty destination for Gen Z shoppers. The beauty chain's exclusive with Kylie Jenner certainly helped, says the investment bank, but Ulta would have achieved the number one ranking because of its well-curated product mix targeted at teens.