PRADA

Event Type: Q4 2018 Earnings Call

Date: 2019-03-15
Company: Prada SpA
So, we just started merchandising activity, where we're not just emphasizing our brands in individual
markets, but also, we want to provide a consistent image to newer consumers. And it's not just millennials
we're talking to, it's generation Z that's actually coming up of age. And so, as they grow older, they are
likely to become luxury consumers more and more frequently. So, we started working not just for support in
the stores' activities there, but also, we have started several new communication projects. We organized
events to enhance our brand experience, and we want to highlight and continue with this kind of events in
2019.
Interim financial report 2018
Use of the pop-up format was continued in the period. The displays involved Prada
and Miu Miu in particular and created innovative shopping experiences, such as
Prada Spirit, dedicated to the Chinese New Year, and Miu Miu Disco, inspired by the
discotheques of the 1970s and 1980s. The pop-ups, infused with the basic styles of
the brands and conceived as traveling projects in a selected number of malls, brought
additional footfall to stores and further strengthened the relationship with customers.
The marketing activities of the period focused on a growing number of strictly digital
initiatives, with the creation of visual identities and the production of content particularly
suitable for the communication channels closest to millennials and generation z. The
program to update the e-commerce platform was continued with the extension of the
new user experience of the prada.com website, which will cover all the Group's core
markets soon, and the ongoing development of the new miumiu.com

digitalization
Event Type: Q4 2018 Earnings Call
Date: 2019-03-15

Lorenzo Bertelli
Today, I would like to discuss how the continuous investment in our brands is also reflected in a series of
freshened and planned strategic step to ensure the Prada group develops a best-in-class digital platform that
reach all consumer interaction points without losing touch with our brand DNA.
In terms of digital retail, we added new mobile functionalities to the Clientsphere in-store like wish list, stock
on hand, made-to-order, sales analysis and newsletter.
Retail plan
Optimization of global retail portfolio ongoing
-25 store openings and 23 closures
-140 renovation and relocation projects

During the period, we opened 17 stores and closed 13 stores, in line with our strategy of optimizing our store
network. 
2017 Overview
Pop-up stores building excitement and customer engagement
Roll-out of 75 pop-up stores in 2017
to target new customer segments through
unconventional selling propositions
•
Complemented by engaging social media campaigns to
drive discussion among key influencers and customer

Key benefits:
•
Widen the client base: more than 50% of purchases
made by new customers
•
Strong brand statement translated into a wider
brand awareness
•
Communicate product novelties in an innovative
way
•
Drive traffic/sales to neighbouring stores benefitting
from the buzz generated by the pop-up

Communaholics
Event Type: Q4 2018 Earnings Call
Date: 2019-03-15

We are also launching new digital channels, allowing us better reach, younger and more local audience. For
example, Twitter in Japan both for Prada and Miu Miu in 2018, Kakao Talk in 2019, and the launch of Prada
Spotify official profile this year to expand the product connection with the music world
Investment in technology have been strengthened in order to improve the merchandising planning, increasing
particularly the accuracy of buying, replenishment and forecasting. Better customer service, thanks to the
launch, 2018, of five regional hubs in Milan, New York, Turkey, Shanghai and Hong Kong. In terms of
CRM, we set up a data science team in 2018, and we are now implementing a data strategy through business
analytics will enable us to better understand (00:21:58) for adhoc campaign, and at the same time we are
increasing integration of data from stores and social media.
Opportunistic
Event Type: Q4 2018 Earnings Call
Date: 2019-03-15
So about the digital budget, I can see that the split is generally between 50% digital and 50% other
communication. We are increasing the general budget of the communication inside the group generally
because, for sure, we have to support it. We think that generally, America's Cup as a sport activity is very
easy to be used to create digital assets, is very like young, and can reach, I think, a younger audience than
usually we reach with the Prada.

Activist
The Independent
Prada launches diversity council led by Ava DuVernay amid blackface controversy

The Diversity and Inclusion Advisory Council, aims to "elevate voices of colour within the company and the
fashion industry at large". Prada says the council will guide the company towards a "more inclusive and
diverse future" and advise the brand as it "invests in and expands opportunities for young students of colour
in the fashion industry".
The Daily Mail and Mail on Sunday (London)
FASHION chain Prada will stop selling furs, in a major victory for animal rights campaigners.
It will ditch them from its 2020 summer collection onwards following talks with the Fur Free Alliance group.
It launched a campaign against Prada last year, and said: The decision to go fur-free is consistent with the
new concept of ethical luxury, and meets the expectations of new consumers who are more careful in
choosing sustainable products that respect the environment and animals.'

Career focused
Together, the board will partner with universities and organisations to sponsor scholarships and training
across Prada's global offices in a bid to "close the inclusion gap in the fashion industry

KERING
2018 report
luxury consumption and patterns are becoming more
value sensitive and digital-oriented and leaning
increasingly toward innovation and newness, especially
as younger people enter the market and more particularly
generations Y and Z (born after 1980 and around 2000,
respectively);
E- commerce
Online sales of luxury goods reached a new record of around
€27 billion in 2018 (up 22% at comparable exchange rates),
representing about 10% of total worldwide personal
luxury goods sales. This includes sales made through
brand and department store websites and by e- tailers.
Online is the fastest growing channel globally, driven by
Asia and by a younger cohort of generation Y and
generation Z consumers. Within e- commerce, brands and
e- tailers are the top per
Millennials continued to fuel the industry’s
growth, as luxury goods purchased by generations Y and
Z represented at least a third of the market in value terms
(based on Bain & Company data). 

Market outlook

generations Y and Z: estimated to have fueled all of the

market growth in 2018, they are expected to account for
55% of the market by 2025 versus c. 32% in 2018
2017 report
E-commerce
OnlinesalesofLuxuryGoodsreachedanewrecordofaround
€23 billion in 2017 (up 24% at comparable exchange
rates), representing about 9% of total global personal
Luxury Goods sales. This includes sales made through
brand websites, e-tailers and retailers.com. Online is the
fastest growing channel globally, with Asia and Europe
being the main growth engines of a traditionally
US-centric market, driven by a younger cohort of
generation Y and generation Z consumers.
generations Y and Z: estimated to have fuelled c.
8
5% of
the market growth in 2017, they are expected to account
for 45% of the market by 2025
The Kering ±oundation takes its commitment to
ending violence against women further with the sixth
edition of the White Ribbon ±or Women campaign
and, in partnership with Make.org, launches the
“
Stop aux Violences Faites aux Femmes
” consultation
More than 2.1 billion people were potentially reached by
the sixth edition of the White Ribbon 2or Women campaign
on 25 November, with the hashtag #ICouldHaveBeen to
encourage everyone to play their part in Fghting violence
against women. This year, the 2oundation targeted
Generation Z, and above all young men, with the aim of
bringing about profound and lasting cultural change. 52%
of the people who participated in the campaign with a
post bearing the hashtag #ICouldHaveBeen were aged
between 18 and 25. At the same time, in addition to its
awareness campaigns and advocation of concrete actions,
the Kering 2oundation became a founding partner of the
Stop aux Violences Faites aux Femmes
coalition launched
by Make.org on November 25, 2017. The initiative brings
together people, large companies and organisations
working to Fght violence against women with a view to
developing and implementing ten concrete solutions
within three years. The pilot project, launched in 2rance,
will be deployed internationally in 2018 (Belgium,
Switzerland, Italy and the United Kingdom)
Beyond 2020, we will continue to evaluate the profitability of all our stores on an ongoing basis and close
unprofitable locations

Career focused
34,795 employees as of December 31, 2018, 62.88% of
whom are women;
•92.50% of employees on permanent contracts;
•50.49% of Group managers are women;
•8.21% of permanent employees work part time;
•36.09 years is the average age of permanent employees;
•5.3 years is the average length of service of permanentemployees;
•474 workers with disabilities;
•431,051 hours of training (excluding safety training), or 20,197 employees trained;
•12,266 permanent employees hired;
•255,769 metric tons of CO2 attributable to energy consumption (21.1%) and transportation
(78.9%);
•67.1% of electricity consumed is generated using renewable resources;
•Kering published its 2017 EP&L for the first time as a pure player in Luxury, reporting a 10%
reduction in the intensity of environmental impacts across the Group (€EP&L/K€ revenue) between
2015 and 2017;
•2,867 social audits carried out among the Group’s suppliers;
•over 489 million people potentially reached by the Kering Foundation’s annual White Ribbon
For Women campaign to raise awareness about violence against Women

Recruiting the best talent by encouraging diversity,

training young people in craft skills, and integrating and
developing talent are central to Kering’s HR strategy.
Forging strategic partnerships
Kering continues its policy of forging international
partnerships with prestigious business and design schools
worldwid
Finally, many of the Group’s Houses support craft guilds
and offer training programs. They have established a
number of professional organizations that help to ensure
the survival of some very demanding and unique skills,
and support long- term employment in the regions where
these crafts originated
inItIatIves promotIng qualIty of lIfe at work
Quality of life at work is a major theme of the Empowering
Talent agreement in Europe. Kering uses this agreement
to promote the continuous improvement of quality of life
at work and is rolling out a concrete action plan for
well- being at work at the French headquarters. Topics
relating to the work environment and organization,
work- life balance and the promotion of the parental policy
were therefore addressed during the plenary meeting of
the European Works Council on December 5, 2018.
The deployment of the HR platform in 2018 has also
contributed to improving quality of life at work by creating
a shared language for information, communication,
learning and listening. All Group employees now have
access to the same platform, regardless of their location,
profession or position, representing a key factor in
employee well- being.
Every two years since 2001, Kering has conducted a
worldwide in- house social climate survey, “What’s the
weather like where you are?”, to measure the perceptions
of employees of all the Houses across the Group on topics
related to their work and their work environment. In 2018,
Kering decided to remodel its global employee survey to
better meet the Group’s speci±c needs and make it easier for
employees to have their say by using a concise questionnaire
available in several languages and accessible worldwide
from any device (smartphone, tablet or computer). Replacing
the previous employee survey, the Kering People Survey,
which was rolled out in January 2019, is intended for all
employees at Kering and all of its Houses. It covers four
aspects of quality of life at work: work organization and
processes, working conditions and the work environment,
communication and subjective factors.
Employee benefits within the Group
In addition to monetary remuneration, the Kering group
has always placed much importance on offering its
employees healthcare, disability/life and pension benefits.
In addition to the coverage provided by law, virtually all
employees therefore enjoy supplementary insurance
through the various schemes put in place by the Group’s
Houses.
For some years, various Houses have offered more
comprehensive benefit plans allowing employees to
balance their work and personal lives. Such plans often take
the form of an offer of education, recreation, transportation
or family support. These popular plans are constantly
changing to better meet employees’ expectations.
Kering has issued a comprehensive parental policy that
guarantees all parents in the Group, regardless of their
personal circumstances or geographical location, 14 weeks’
paid maternity or adoption leave and five days’ paid
paternity leav
Profit- sharing, incentive
and employee savings agreements
In accordance with national legislation, almost all of the
Group’s employees in France benefit from a profit- sharing
and incentive plan governed by an agreement for their
legal entity. Tax and payroll deductions may apply to the
amounts derived from these plans in accordance with the
applicable regulations.

Communication one
China, for Gucci, became the third online market after the U.S. and the UK with a very rapid growth.  So the
desirability of the brand in China is super high. We had also, as you know, very strong success on the social
media in China with very rapid development of followers on WeChat, which has been one of the most rapid
increase or the most – one of the strongest increases in terms of traffic and visits and also clearly
engagement.

Pomellato’s strategy will Focus on boosting

awareness, reaching new audiences and building an ever
more relevant product o3er architecture. Communication
strategy will be Focused on new young and digital
ambassadors. In particular, a powerFul digital and print
communication campaign will be launched, Featuring the
Famous Italian blogger and influencer, Chiara 2erragni,
which is expected to have a strong impact on the brand
visibility worldwide

The distribution network will be upgraded during the year

withtheroll-outofanewvisualmerchandisingdisplaywithin
thenewshop-in-shopsandcorners. Commercialpartnerships,
influencers’endorsements,intensepublicrelationsandhighly
targeted digital actions will amplify the brand’s values and
engage end consumers.
Ulysse Nardin’s ambition is to increase brand desirability
through strong storytelling and nurture conversion through
improved shopping experience.

Activist
Ongoing support for culture and heritage
Healthcare and disease prevention
Diversified resources for education
and training
Combating poverty
Support for women and children
In 2018, Kering Eyewear launched the Smart Worker Challenge, a series of around ten very short
challenges that enable the company to promote eco- friendly practices among its employees and at
the same time collect data to help identify the main avenues for reducing its environmental
impact. Some events are particularly conducive to creating a cultur

Kering’s climate strategy (see “Environmental management”) goes beyond the regulatory measurement of its
carbon footprint to include an annual analysis of the entire value chain, from cradle to gate, via the
EP&L, which guides and validates the Group’s strategic decisions. The Group helps address the
impacts of climate change
in two ways:
• by directly reducing the carbon footprint associated with its energy consumption and the
transportation of people and goods;
•from a longer- term perspective, by evaluating and reducing emissions of greenhouse gases in its supply
chain, especially by using the EP&L analysis implemented by the Group for all its Houses

Over 200 publications in offline and online media

covering Kering sustainability initiatives in 2018
Kering publishes standards on sourcing and manufacturing processes
In early 2018, Kering published on its website its standards for sourcing and manufacturing processes,
in line with its open source policy and its principle of sharing on sustainability issues, aware
that a commitment from all stakeholders is the only way to make a difference in view of the extent
of the challenges we face. Drawing on a long process of research, consultation and sharing with
the Group’s Houses and a wide range of external stakeholders, the Kering Standards, based on five
pillars (environmental impact, social impact, animal welfare, traceability and chemical
substances), provide all of the Group’s Houses and suppliers with essential guidelines geared
towards reducing our environmental footprint and achieving the Group’s 2025 objectives. The
Standards are available on the Group’s website. Kering launches the Sustainable Innovation Award in
China with Plug and Play
In December 2018, Kering, together with global innovation
platform Plug and Play, launched the Kering Sustainability
Innovation Award, which aims to fast- track sustainable
innovation within the luxury and apparel sectors in China.
Inspired by Kering’s Sustainability strategy, “Crafting
tomorrow’s Luxury”, the program will identify innovative
start- ups and technologies in China with the potential to
disrupt the current textile value chain, bringing a positive
environmental and social impact. Kering is particularly
keen to discover start- ups that address challenges in terms
of alternative raw materials, green supply chains, retail and
the circular economy. The start- up scouting, due diligence
and project selection process will take place in 2019.
Kering publishes its integrated report,
a first in the luxury industry
In 2018, Kering published its first integrated report,
covering all of the Group’s activities in 2017, becoming the
first company in the sector to publish such a report.  The
report offers a fresh and comprehensive perspective on
Kering, its history and its strategic vision, and sets out its
integrated model and value chain in the service of
comprehensive value creation, incorporating creative,
financial, environmental, social and ethical aspects.  It is
available on the Group’s website.
True to its commitment to transparency
and open sourcing, Kering published its
2017 EP&L results in 2018
Kering published the results of its EP&L for the
sixth consecutive year, but for the first time as a pure
player in the world of Luxury. Amounting to €482 million
in 2017, the results represent a 10% reduction in intensity
compared with 2015 to €44 EP&L/K€ revenue, and are in
line with the goal of reducing intensity by 40% by 2025.
They conFrm the relevance of the strategy adopted by the
Group to reduce its environmental footprint, and in
particular the focus on the upstream stages of supply
chains for key raw materials, with 76% of the impacts in
Tiers 4 and 3 (production and processing of raw materials).
It also validates the Group’s climate strategy, with the
Group’s carbon intensity (€EP&L/€K in revenue for
greenhouse gas emissions) falling by 7.3% between 2015
and 2017, putting Kering in a strong position to reach its
2025 Science Based Target, compatible with a 2°C scenario.
Kering and the London College of Fashion
launch the first MOOC dedicated entirely
to sustainability and luxury fashion
In 2018, Kering and the London College of ±ashion, in the
fifth year of their strategic partnership, launched the first
Massive Open Online Course (MOOC) dedicated to
sustainability and luxury fashion. Designed as a continuation
of the annual teaching course offered to students by Kering
and London College of ±ashion, and in keeping with
Kering’s commitment to share its sustainability initiatives
and methodologies, the course is built on six modules
for a total of 18 hours of teaching and exchange.
Spread over a period of six weeks, the modules alternate
between expert talks, Flms, discussions and podcasts.
The two sessions held in 2018 attracted more than
17,500 participants in nearly 150 countries. A third session
opened in ±ebruary 2019

The Independent
Luxury fashion brands pledge to stop using under-18 models; The policy will come into effect early
next year

The Kering Foundation: ten years of combating violence against women

2018 marked the tenth anniversary of the Kering ±oundation.
Since 2008, it has committed the Group to combating
violence against women.
For the 2018 edition, the Foundation
focused on cyber- bullying, targeting Generation Z in
particular. Launched via the hashtag #IDontSpeakHater,
the campaign reached more than 489 million people

Responsibility:
All our operations are founded on a responsible
economic model. Our comprehensive, sustainable
approach is a structural competitive advantage
•Towards sustainable Luxury
Can a responsible economic approach change the very nature
of Luxury? For Kering, the answer is a resounding “yes”.
For our brands, sustainability is an economic opportunity,
a source of inspiration and innovation. Methods, materials,
resources and products are being reinvented and customer
usages and expectations are changing. Having set itself
measurable social and environmental performance targets
as part of its 2025 strategy, Kering is changing the way
it designs luxury products through the inclusion of
non -±nancial
criteria to create sustainable value for
customers as well as for society.
•
A people- centered approach
The aim of the responsible model is to rethink Kering’s
relationships with its stakeholders so as to ensure fair and
ethical treatment that constantly takes into account the
social and environmental impacts of the Group’s operations.
The model impacts all dimensions of Kering’s ecosystem,
from the Group’s strategy and the Houses’ creative decisions
to operational production, processing and distribution
choices. Placing people at the heart of the model brings
fresh entrepreneurial spirit, inspiring and engaging
employees and stakeholders.
•
Creative potential
Responsibility is deeply embedded in the Group’s
organizational structure, bringing about short- and
long- term competitive gains. As well as promoting growth
through ever more innovative and attractive products, it
rewards best business practices such as good cost control
and process upgrading. In a context of limited natural
resources, new high- quality materials are being fashioned
and more sustainable processes devised. We are constantly
on the look- out for innovative and disruptive technologies.
For our brands, this represents a vast swathe of creative
territory yet to be explored.
•
Governance and ethics
Built on the Group’s core values, Kering’s responsible model
leverages an ambitious governance structure, supported
by the Board of Directors and its Sustainability Committee.
Together they drive the sustainability strategy, which the
Houses put into action every day under the guidance of
dedicated experts. The Group’s Ethics Committees,
Compliance structure and whistleblowing procedure for
employees and third parties ensure that Kering’s Code of
Ethics and principles for responsible business conduct
are properly applied

Digital
Kering announces new developments in its digital
strategy, aimed at enhancing the Group’s omni- channel
capabilities and its Houses’ digital activities. In particular,
Kering will fully internalize the e- commerce activities
currently handled through the joint venture with Yoox
Net- a- Porter Group (YNAP) in the first half of 2020

Digital expertise, CRM and innovation

A number of projects have been set up under the leadership
of the Chief Client and Digital Officer to support Kering in
its digital transformation and drive forward its e- commerce,
CRM, data science and innovation activities. These include
several pilot projects using data science techniques to deliver
personalized messages and experiences to individual
customers, as well as the creation of a dedicated data science
team to improve the service provided to the customers of
Kering’s Houses by making the best use of the available
data. Lastly, the Group’s Innovation team has been tasked
with fulfilling two objectives: firstly, to instill an internal
culture of innovation (applying a test- and- learn approach,
sharing discoveries quickly, scouting business trends, etc.)
and secondly, to work on disruptive technologies to further
improve the client experience in the future in terms of
business or environmental matters

General meeting 2019

Gucci M E D I U M - T E R M L E V E R S & A M B I T I O N S
D i g i t a l l e a d e r s h i p
Bottega venezia: strengthened communications , expanded digital presence

Saint Laurent embraces a clear digital strategy and a consistent

and strong social media presence establishing solid online
visibility. This is achieved by developing owned channels,
while reinforcing earned media relationships and creating
relevant and viral content.
Since his appointment, Anthony Vaccarello has introduced
a new digital strategy, pushing the House to become the
fastest growing brand on Instagram, Weibo and YouTube,
with high triple- digit growth on all three social networks,
and clearly reaffirming his sharp 360° vision for
Saint Laurent.
Social media initiatives met with strong success as social
platforms were fully integrated into global communications
practices and strategies. As of December 2018, Saint Laurent
had more than 2.9 million fans on Facebook and was one
of the most popular luxury brands on Twitter with close
to 5.5 million followers, as well as the fastest growing brand
on Instagram, with a following of 4.2 million people.
In line with its current strategy, Saint Laurent will continue
to expand its retail distribution network in 2019, while
reinforcing its online presence and focusing on building
an excellent experience for its customers in every
touchpoint with the brand
The Alexander McQueen brand has a strong social media
presence, with 7 million followers on Instagram and
approximately 1.9 million followers on Twitter and
Facebook as of the end of 2018. To increase honest and
direct connections with its customers and build a true sense
of community, Alexander McQueen continues to invest in
digital communication, including through heightened
engagement across Chinese social media such as Weibo
and WeChat.
Alexander McQueen’s social media channels are integrated
into the larger brand communications strategy and fully
aligned on key themes and storie
On social media, Balenciaga had more than 1.4 million
fans on Facebook in December 2018 and is increasingly
popular on Instagram, counting over 8 million followers
at the end of the year. This reflects growing interest for all
the collections and a significant gain in brand awareness
and visibility.
In 2019, the brand will continue to bene3t from the momentum
generated by the new creative vision and new product
launches. While wholesale distribution will remain an
important contributor to the brand’s activity, retail and
e- commerce development will continue to be the priority.
To this end, new store openings are planned during the
year in strategic locations both in mature markets and in
Asia. In its roadmap for 2019, Balenciaga also plans to
further develop its men’s collection, with dedicated spaces
in the new stores, and to continue to enlarge its online
product and services offering, forming part of the overall
cross- channel retail strategy

Opportunistic
L’Oréal
In China, the Y generations,
born from 1980 to 2000,
and the Z generations
(born after 2000) like
to stand out from the
crowd and express their
personality. They want to
be original, set their sights
on aspirational brands, and
travel all over the world. The
makeup category is making
the most of these profound
generational changes,
thanks to the boom in
connected beauty

The Group expects consumer choices to be increasingly influenced by the carbon impact of products and the
overall environmental performance of
manufacturers, with certain categories of consumers becoming increasingly mindful of the impact of their
purchasing decisions. 
Event Type: Q4 2018 Earnings Call
Date: 2019-02-08
And then second question would be about NYX and Urban Decay. We haven't talked a lot about them
today. So, what happened in 2018? And I guess consolidation a bit, but what happened?
Second thing is that the social traction of the brand is extremely high. It remains a darling of all the
influencers of makeup artists. Third is you still have a lot of people even makeup lovers that don't know
NYX yet. And fourth, wherever in the shops we are, wherever we are, NYX is always within the top brands
of the store. So we believe that it's a breath before a new phase of development for this very unique brand for
the division
Company presentation 31 dec 2018
New e-commerce
practices and services
E-commerce is changing, to offer new distribution
methods and services.
Influencer-driven sales
are growing increasingly fast. L’Oréal has
partnered with Boutiquaat, a multi-brand
e-commerce site in the Middle East that hosts
more than 200 beauty influencers. Consumers
receive recommendations for products via the
platform, where they can also buy them directly.
The services available online are also growing.
The augmented reality technologies
by ModiFace allow customers to virtually
out products and simulate different looks
This incredible solution helps consumers
feel more certain about their choices, leading
to increased purchases.
Voice ordering has become increasingly effective
on e-commerce websites and will be the next big
challenge for the Group’s brands

activist:
L’Oréal USA received a maximum score of 100 in
the Corporate
Equality Index 2018,
consisting of an investigation and a report
managed by the
Human Rights Campaign Foundation
. This score reflects the commitment by L’Oréal USA in favour of equality for persons who are part of the
LGBT (lesbian, gay, bisexual and transgender) community within the Company

digital:
Design: Retail
Al + AR = Beauty Fab: L'OREAL'S MODIFACE AND HONG KONG-BASED HEALTH AND
BEAUTY RETAILER A.S. WATSON GROUP ANNOUNCE VIRTUAL MAKEUP TRY-ON
#COLOURME.(PLUGGED IN)

To keep pace with the changing face of beauty retail, Watsons is partnering with Toronto-based ModiFace,
an artificial intelligence and augmented reality platform specialized for beauty (which just so happened to be
acquired by L'Oreal early last year as part of the company's digital acceleration strategy). ModiFace resides
within L'Oreal's Digital Services Factory, a dedicated network to design and develop new digital services for
the group's brands.
"Digital technologies are about to revolutionize retail, making shopping more entertaining, easy and
personalized. We want to be a driving force of this transformation and so does A.S. Watson, who is a
longstanding and trusted retail partner for us," says Alexis Perakis-Valat, president of L'Oreal's Consumer
Products Division. "
The cosmetics market continued to grow steadily and in fact
accelerated in 2018. Do you think this is a structural trend?
Clearly, the market has been particularly buoyant, making 2018
the best year in 20 years
(1).
There are strong underlying trends
driving this acceleration over the past few years.
The first, and probably most important factor is the insatiable
desire for beauty across all countries and cultures. Second,
premiumization: consumers are ready to pay more and trade
up for products with new benefits, better performance and
superior quality. Third, digitalization, as beauty and digital are a
perfect match. It has never been easier to discover beauty, share
it and buy products online, even in the most remote corners of
the world. Digital is and will remain a terrific booster for beauty.
Finally, our market is also fuelled by increased penetration
of beauty all over the world. First, because of e-commerce,
which is extending our reach far beyond the limits of traditional
distribution, especially in emerging economies. Also because
of many white spaces in terms of categories and countries.
And finally because there are always new consumer targets.
Once again, L’Oréal outperformed the market. What were the
drivers of this growth?
Our growth accelerated to produce our best year in more than
10 years. And we achieved a new record operating margin of
18.3%.
We significantly outperformed the market, generating strong
positions in the most promising and strategic areas for the
future.
We strongly reinforced our position in Asia Pacific, where
we enjoyed our highest growth. Asia Pacific overtook North
America to become our second largest zone this year. By
sector, we outpaced the market in both Luxury, the most
dynamic of the market, and Dermocosmetics, ideally placed
to meet rapidly growing health and well-being expectations
all over the world. We strengthened our leadership in two
thriving channels: e-commerce and Travel Retail. Finally, we
outperformed in skincare, the category where the combination
of trusted brands, power franchises and the innovation offered
by our R&I, is a winning equation.
You have said previously that digital is not the cherry on the
cake, but the cake itself! How important it is for your business?
In fact, Digital is doing much more than generating additional
business. It is radically transforming our company.
Digital is boosting our brand power. In this world of algorithms,
bigger is truly better. In 2018, our biggest brands have become
even stronger.
Digital is also strengthening our power to connect with
consumers. The acquisition of ModiFace, for example, has been
instrumental in enriching the services we offer.
Digital is now totally embedded in our teams: in every brand,
in every Division, every function and every country, infusing
the entire company with digital excellence.
Digital has been, and will continue to be, a powerful accelerator for growth.
Beyond Digital, new technologies are opening up new horizons for Beauty. And we are absolutely determined to
be the pioneers, the champions and the leaders of this new Beauty Tech world.

puma
Operating expenses (OPEX)
rose by 11.8% and amounted to EUR 1,928.4 million in 2018.
Intensified marketing activities, the refurbishment and extension of our own retail store network,
including our e-commerce business as well as further investments into our IT-infrastructure have
led to this increase.