L'Oréal in talks with Clarins to acquire Mugler, Azzaro

By

Dominique Muret

Published
Jul 2, 2019

It looks like nothing can slow L’Oréal down. The global cosmetics company announced on Tuesday that it has “entered in exclusive negotiation with the Clarins Group in view to acquire the brands Mugler and Azzaro,” which have been owned by Clarins since the 90s. No further financial details have been provided about the operation, which “should be completed in the course of 2019.”
 

The purchase would cover Clarins’ fragrance and fashion division, which represents 26% of the group’s overall revenues, or 400 million euros out of a total of 1.6 billion euros recorded by the company last year. Three structures are therefore concerned: Clarins Fragrance Group (CFG), which is responsible for Mugler and Azzaro Perfumes, as well as certain Azzaro accessories, (leather, eyewear and watches); Thierry Mugler and its ready-to-wear businesses; and Strasbourg-based fragrance manufacturer Cosmeurop.
 
With the acquisition of Mugler’s ready-to-wear businesses, which has been led by American designer Casey Cadwallader since 2018, L’Oréal would also be taking its first steps into fashion.

As for the fragrance business, thanks to the global success of Mugler’s Angel and Alien, and Azzaro’s Homme, Chrome and Wanted, the two brands should boost L’Oréal’s already very dynamic luxury division, which currently boasts 22 labels, including four billionaire heavyweights: Lancôme, Yves Saint Laurent, Giorgio Armani and Kiehl’s. L’Oréal’s Luxe represents 34.8% of the French group’s revenues and saw a 14.4% increase in comparable sales in 2018, reporting revenues of 9.3 billion euros, compared to the growth of 2.5% seen in the company’s consumer products division.
 
“The perfume category is at the heart of our global strategy for growth at L'Oréal Luxe. In this context, we would be thrilled to welcome Mugler and Azzaro: these signatures, with a long history in fashion and olfaction, would perfectly complete our portfolio of brands,” said L'Oréal Luxe President Cyril Chapuy in a release. The two brands would notably reinforce what the cosmetics giant describes on its website as a “portfolio of global brands – the richest and most diverse in the beauty industry.”
 
Thanks to luxury products and “active cosmetics,” the sales of which have exploded in China recently, the group saw its annual growth accelerate significantly in 2018, reporting its best performance since 2007 with total revenues of 26.9 billion euros.

For Clarins, “this project fulfils the Clarins Group’s ambition to ensure its Beauty business reaches its full potential, while entrusting the Mugler and Azzaro brands to global beauty leader L’Oréal,” as revealed by the company in a release.
 
It represents a decisive change in strategy at Clarins, which would be saying goodbye to its strongly competitive fragrance category, which is in sore need of significant investments, and refocusing on its namesake brand and its historic cosmetics business. In so doing, the company is seeking to accelerate its international expansion, particularly on China, as well as to invest in leadership talent for its makeup and self-care categories, and boost its digital and omnichannel transformation.
 
“We know that if the project goes through, our two brands will enjoy optimal conditions as part of L’Oréal Luxe, which will guarantee their future growth, benefiting our employees,” commented Christian and Olivier Courtin-Clarins, president of the supervisory board and managing director of the Clarins Group, respectively.
 
“We would thus be able to focus on ensuring our Beauty division reaches its full potential,” concluded the two sons of the company’s founder, Jacques Courtin-Clarins, who passed away in 2007.