The Business of Beauty

In Nabbing IT Cosmetics, L’Oréal Luxe Just Bought a 21st Century Seat at the Direct-Sales Table

RR_L’Oréal bought IT CosmeticsRoughly 10 days ago, after returning home from a lengthy trip across the Pond, I reluctantly eyeballed a sizeable pile of mail (junk and legit), as well as several boxes bearing beauty products for review.

“Do I deal with all this now, or later?” I asked my red-eyed, jet-lagged self. “I at least want to open the IT.”

Trust me when I tell you that no matter what I’m up to, when a parcel arrives from IT Cosmetics, it gets sliced into before the FedEx dude even pulls out of the driveway.

The stuff is that good.

So this week, when L’Oréal Luxe announced its acquisition of the once-little Jersey City brand, I was shocked at the numbers ($1.2 billion) but not at the purchase strategy itself.

While I’m often left scratching my head at some of the deck shuffling that goes down in this business (Coty snatching up 13 scents – including a few bonafide duds from P&G in one fell swoop), the IT buy made perfect sense. The products rock and the brand has an obsessive, cult-like following.

It’s Slightly Shocking Why L’Oréal Came Knocking

But here’s what did surprise me: how forthright Luxe USA group president Carol Hamilton was in laying out the purchase rationale. What helped IT break out of the indie pack — and let’s face it, there are still plenty of buzzy makeup brands up for grabs right now — was both its stellar formulas and its massive presence on QVC.  For a top-ranking exec at the world’s biggest beauty company to admit that IT, a brand conjured out of whole cloth by a former news anchor with skin issues, might know something L’Oréal doesn’t is: A) wildly candid; and B) totally refreshing.

In the early years of the Acquisition Era, circa the early Aughts, the vibe was much more patriarchal. If some upstart was lucky enough to be picked out of the pile by a Leonard Lauder or a Guy Peyrelongue, it was expected to get thoroughly schooled after signing on the dotted line. Pipeline, distribution, scaling – there was so very much Scrappy Upstart needed to learn.

And one of the biggest carrots was the post-acquisition access to world-class R&D facilities. The subtext: Just think what you could do with the help of our mad scientists!

Clearly, IT doesn’t need L’Oréal’s mad scientists. After all, IT is shorthand for “Innovative Technology.” From the get-go, the brand has deployed a team of plastic surgeons that have not only helped founder Jamie Kern solve her own problems (she suffers from rosacea, and seriously skimpy eyebrows), but evidently those of millions of other women around the world. With north of $180 million in net sales for 2015, the eight-year-old company has obviously found legions of fans for its paints and powders.

Among the problem-solvers IT has had great success with: Your Skin But Better CC+ Cream, Celebration Foundation, Bye Bye Under Eye waterproof concealer, Brow Power pencil, No Tug gel eyeliner and Vitality Lip Flush, a long-lasting balm-stain hybrid. Its gargantuan range of cruelty-free, ultra-plush brushes has also garnered rabid fans.

Okay, so L’Oréal Luxe is hardly hurting for beautifully crafted makeup. But what it doesn’t have, that IT does, is a big seat at the direct-sales table. In addition to selling via its own Guthy Renker-produced infomercials, IT is an absolute powerhouse on QVC, where either Lima or a core member of her team pop up more than 200 times a year.

Axing Out the Middleman

Infomercials? QVC? They’ve both been around forever, but for L’Oréal, they’re fresh turf. And IT’s foothold in QVC was one of the key reasons L’Oréal ponied-up serious coin for the company. (According to Bloomberg, this is its costliest acquisition since pinching YSL Beauté from Gucci Group for $1.7 billion in 2008.)

In a post-announcement chat with WWD, Hamilton was quite clear that the division is ready to play ball with QVC via Kern & Co.’s sell-out appearances. “That will be a new powerful channel for us,” she said. “It’s not brand new, but having strength there is brand new for us.”

That sounds like the opposite of the old-school acquisition patriarchy. In fact, that sounds suspiciously like L’Oréal Luxe saying to IT: Teach us what YOU know.

Want to know what was in that box IT sent me, the one I couldn’t wait to open when I got back from my trip? A nine-pan “anti-aging” eyeshadow palette called Superhero, featuring three “eye foundations” that neutralize redness on the lids while anchoring the soft, wearable colors. Right up my Fifty-Something, makeup-junkie alley.

Also tucked inside: An illustrated booklet starring Jamie Kern as a cartooned caped crusader, out to slay all the beauty-problem dragons we women face on a daily basis. I feel better knowing this smart babe is out there, on my side.

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