South Korean LG brand now looks to expand in EMEA
The firm recently acquired Japanese firm Everlife and Canadian retailer Fruits & Passion, and now it has signed an agreement to open and develop TheFaceShop stores in Russia.
LG Household & Healthcare has also announced plans to open two outlets in Jordan, the most politically stable country in the Middle East, as a stepping stone into the surrounding GCC countries such as Saudi Arabia and Kuwait.
"We are considering both local and overseas deals," a company spokesperson reports.
The FaceShop is a body, bath, skin care and make-up product retailer in the brand’s portfolio. The brand is also present in the US, Australia, Taiwan, Vietnam, Hong Kong, Dominican Republic, Mongolia, Japan, China, Singapore, Thailand and Indonesia.
Focus on EMEA
TheFaceShop plans to focus its activities in Russia on natural cosmetics. The company has high hopes for the development of natural cosmetics in the Russian market, where local demand for natural cosmetics is steadily growing.
The company that will distribute for the SK brand 'Direct', reports the first Russia based store will be opened in St. Petersburg by June, with more stores throughout the country planned by 2017.
The value of the investment at the initial stage is expected to reach US$20m, but that figure may significantly increase during the next several years.
One reason for this is vigorous activity of beauty retailers, which in recent years have significantly increased sales of natural cosmetics and expanded their range in the Russian market.
Considering a move to buy Elizabeth Arden
Initially LG H&H would not strike us as the beauty behemoth like many of the other big players, but having acquired several smaller firms in the local market, including TheFaceShop, it is reported that it considers a bid for the U.S. cosmetics firm as an acquisition that would give it globally recognized luxury brands and would be its most ambitious to date.
Reuters reports Elizabeth Arden has a market value of $845 million, and it has seen its sales hit by a much weaker-than-expected North American retail market as well as deep industry discounting in key European markets that have eroded profit margins.
Speaking with Kline M&A experts last month, it is clear that acquisitions are the way to expand, particularly in beauty, as it can really help to inherit an existing company’s reputation and market standing.