L'Oréal, the makeup company that makes Maybelline Mascaras and Lancome face creams rose in the markets by 5.6% but that doesn't seem to be enough for the companies investors. They fear it is impossible for the company to improve on last years this year. In order to combat this fear they are going deeper into the mass-market cosmetic industry by taking share in hair care products in attempts to combat P&G's Pantene. The company also secured a position in the Chinese cosmetic market. One of the main problems is that the company seems to have a difficult time competing against other cosmetic companies. Other Luxury companies trade on average 15 times that of L'Oreal. If L'Oreal wants to stay a major competitor in the market they are going to have to offer more promotions. But with advertising costs raising, investors are beginning to think that it may not be worth it anymore.
http://online.wsj.com/article/SB10001424052748703786804576138263444535044.html?mod=WSJ_Consumerproducts_leftHeadlines
As a buyer of L'Oreal products, I sincerely hope that investors don't decide the company isn't worth it. Though it may not be doing as well as it has in the past, it still had a 5.6% rise in profits which is a lot considering the state of the economy and the high rate of unemployment, which means there are fewer consumers out there buying products. L'Oreal has a whole line of products that consumers know and trust and I think that if the investors stick it out and give the company time to come up with some new advertising strategies or maybe a new product, they will be rewarded.
ReplyDeleteI agree with Suzanne. A 5.6% rise in profits is great, especially since we are still technically in a recession. I honestly don't think the investors are going to pull out though. L'Oreal is one of the biggest personal products companies in the world, and the fact that it is still growing during a recession is evidence enough to the investors that they have made a good investment. I just checked the stock price, and it appears the price has gone up 3.36 dollars, whcih shows that there is still interest in investing in L'Oreal.
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