L’Oréal on Aesop: Beauty giant eyes ‘huge prospective growth’ for Aēsop in Asia led by China

Speaking during the group’s most recent first quarter (Q1) earnings conference, CEO Nicolas Hieronimus, said Aēsop was in line with the current trends in the beauty and personal care market, as evident in its performance.

“It's a luxury brand that really thrives on many of the current trends and this quest for well-being for lifestyle brands that are that are extremely high quality with high-touch service, and of course naturality. It's a brand that's doing great, as you’ve seen from [Natura &Co’s] publications, it continues to have a very high growth.”​

Founded in 1987, Aēsop is a luxury brand, that offers multiple products across beauty and wellness categories, including hair, body, skin, home, and fragrance. L’Oréal company announced on April 3 that it signed an agreement with Natura &Co to acquire Aēsop, from Brazilian firm Natura &Co.

In the announcement, Hieronimus said the firm could help Aēsop “unleash its massive growth potential, notably in China and Travel retail.”​

Currently, it has a small presence in China where the first store opened in 2022.

“When we were in China a couple of weeks ago, we all went to visit them and they were packed with Chinese consumers that seemed to be very excited by this brand, which is indeed very much in sync with their own expectations,” ​said Hieronimus during conference.

He added the firm also sees an opportunity to grow the brand in the travel retail market and help it to grow its online business.

“China is a great potential, and travel retail as the two are very correlated. Travel retail is a great opportunity as is also e-commerce. They have pretty good e-commerce activity, but there's still a lot of opportunity there. The weight of e-commerce is inferior to the average of L’Oréal. We think we can bring our own digital expertise and e-commerce expertise to Aesop. It’s something that we're very excited about and it will be a great addition for L’Oréal Luxe.”​

L’Oréal CFO Christophe Babule agreed that the brand had a lot of opportunities to improve.

 “What is important is that this is a brand that is doing not only strong business in in boutiques, but also doing already a nice business in e-commerce – so it’s an O+O model – with huge prospective growth in Asia, mainly China and travel retail as well.”​

For the foreseeable future, Babule believes the growth of Aēsop will be similar to the growth journey of skin care brand Kiehl’s, which L’Oréal bought in 2000.

“Clearly our plan is to progressively improve the profitability of Aesop over the course of time, as it's been done with Kiehl’s,” ​Hieronimus concurred.

According to Hieronimus, the firms are aiming to finalise the sale at the beginning of the second half of the year.

Aēsop currently operates around 400 points of sale across the Americas, Europe, Australia, New Zealand, and Asia. The brand posted sales of USD537m in 2022.

The proposed transaction valued Aēsop at an enterprise value of USD2.525bn, according to L’Oréal.