Sephora merges with leading Spanish retailer
joint venture between Sephora and the Spanish retail stores El
Corte Inglés - a move that is in line with plans to expand its
retail base throughout Europe.
The EU Merger Regulation status will means that the joint venture will now be in a position to exploit the specialised cosmetic shops in Spain previously solely owned by Sephora.
The Commission gave its approval after its investigations into the deal concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it and has therefore approved the concentration.
Currently El Corte Inglés, which is one of Spain's leading highstreet deparment chains, operates in the same markets as the joint venture, namely retail sales of luxury cosmetic products and mass market cosmetic products.
However, given Sephora's limited market shares, the Commission's investigation said that it had "concluded that the creation of the joint venture would not substantially alter the current position of El Corte Inglés and the joint venture vis-à-vis its main competitors."
Sephora, which is a part of the the LVMH - Moët Hennessy Louis Vuitton - group also has specialised retail stores of cosmetic products in other EU countries including France, Greece, Italy, Luxemburg, Poland, Portugal, Czech Republic and the United Kingdom.
Since it was bought up by LVMH in 1997, Sephora has continued to win and increasing market share in the US, Europe and in the domestic market of France. When LVMH announced its full year group financial results last week, the group said that Sephora had made a considerable contribution to what has proved to be a highly profitable year.
LVMH said that its net income had increased by 40 per cent to reach over €1 billion in 2004. In line with this it said that Sephora had also achieved "a commensurate increase in profitability".
Sephora's strong financial performance was helped along by argeted expansion of the store network into markets with the highest potential, which in 2004 including a move into the Canada market. Likewise the growing success of the Sephora.com website was also marked as a clear growth area, and one that is expected to continue to grow significantly in the coming years.
LVMH also said that its Perfumes & Cosmetics business group improved profitability in 2004. In particular Parfums Christian Dior recorded growth in both sales and operating income in a highly competitive market. The group said this was due in part to the success of Pure Poison, a global best seller in 2004, and to the significant progress made in make-up.
Additionally the success of new products including L'Instant pour Homme from Guerlain, the new make-up line from Givenchy, the KenzoAir and Solo Loewe perfumes, all contributed to the group's performance. BeneFit continued its double-digit growth in the US and the UK where the brand grew market share.
