Establishes presence in the make-up specialist brands market
Cosmetics giant L’Oréal has announced the signing of an agreement with investment company Castanea Partners to acquire Urban Decay. The California based brand – created by Wende Zomnir in 1996 – has a strong following among young, fashion-forward consumers and L’Oréal hopes that the acquisition will enable it to make inroads into the market for make-up specialist brands, which it says represents 44% of the luxury make-up market in the US.
The brand recorded net sales of $130m in the year ended June 2012.
Commenting on the acquisition, Nicolas Hieronimus, president of L’Oréal Luxe, said: “Urban Decay will beautifully complement L’Oréal Luxe’s portfolio of iconic brands. It is the make-up specialist we needed to fully satisfy young women in search of playful colours and inspiration in selective distribution at an accessible price point. It is totally additional to our existing propositions and as such it will contribute significantly to the growth of the division in the years to come.”
The move could also strengthen L’Oréal’s position in the key assisted self-service channel, one of the fastest growing segments in US luxury retail as well as e-commerce, where Urban Decay has a strong presence through www.urbandecay.com and www.sephora.com.
Frédéric Rozé, ceo, L’Oréal USA said: “Thanks to the acquisition of Urban Decay, the group will strengthen its position in two very dynamic distribution channels in the US, assisted self-service and e-commerce. We look forward to this new and exciting opportunity.”
2012 has been something of a rollercoaster year for Urban Decay, whose intention to expand into China, announced in June, was quickly retracted as compliance with China’s animal testing regulations was felt to be too incompatible with the brand’s cruelty-free policy.
Tim Warner, general manager of Urban Decay, added: “L’Oréal’s strong innovation capabilities and presence in every channel of distribution will enable Urban Decay to reach its full potential in the marketplace. Together we have great ambitions for the future.”