The French group Moet Hennessy Louis Vuitton (LVMH) in November 2016 consolidated 100% of the Russian cosmetics chain of stores of “Ile de Beaute”, as follows from the data by SPARK and data of the Cyprus registry, however, it has become known only now. On November 8th last year, 100% of the Cyprus company Galonta Holdings Limited, which owns a network “Ile de Beaute” and belongs to SAS Sephora (part of LVMH).
Information about the transaction was confirmed by “Ile de Beaute” head of Department of Advertising and PR Svetlana Kryukova who commented that “a new Chapter in the history of the company has begun” and together with the LVMH “will continue its development on the Russian market, creating trends and innovations in the world of beauty.” The scheme and the details of the transaction were not commented upon. The founder of the chain Igor Denisov did not comment neither did the press service of the headquarters of LVMH. Consolidation of “Ile de Beauté” shares for LVMH — “the logical conclusion of the purchase process, which started in 2008,” says Svetlana Kryukova.
Partnership between LVMH and the Russian perfumery-cosmetic chain of stores began in 2008. Then the founders of the holding “United Europe” (at the time owned stores), Igor Denisov and Aleksey Gribkov created a joint venture with the French company for the development of the retail chain, where LVMH received 45% and the option to further increase its stake. The deal at that time could pass upon evaluation ($167-250 million) of the entire chain consisting of 103 shops. Interest in the Russian company LVMH explained as there was high potential of the perfumery and cosmetics market in Russia. In addition, it is consistent with the international strategy of Sephora SAS to expand in emerging markets. In 2011 Sephora SAS realized its SHA option and increased its stake to 65% through the acquisition of Mr. Gribkov’s shares. Before November 8, 2016, the remaining 35% in Galonta Holdings Limited were owned only by Mr. Denisov as follows from the data of the Cypriot registry.
An additional part of the deal in 2008 between the partners was the transfer of franchise on the development of the Sephora stores to Mr. Denisov’s and Gribkov’s company. Prior to that, from 2003, the Sephora franchise project in Russia was developed by the Ile de Beaute’s main competitor under “Alkor and Co” holding who operates the largest specialized perfumery-cosmetic retail called “L’etoile”. LVMH were dissatisfied with the policies of “Alkor and Co” towards the brand — as they opened Sephora stores on the principle of “shop-in-shop” and not as individual outlets. There are about 2.3 thousand individual Sephora stores in the 33 countriesin and the format is a full-fledged multi-brand supermarket. But the erupted in 2008-2009 crisis has changed the plans for Mr. Denisov and his partner, and LVMH continued cooperation with “Alkor and Co.” until the end of 2010. In 2011 the right for Sephora development still went to Mr. Denisov and Gribkov who failed to create a separate chain under Sephora name. In the end, Sephora cosmetics were sold in the “Ile de Beaute” stores the same way as it was sold in “L’etoile”.
“Ile de Beaute” is the third largest specialized retailer of cosmetics and perfumes in revenue after “L’etoile” and “Rive Gauche” in Russia (2016 data).” The revenue of “Ile de Beaute” in 2015 amounted to 17.9 billion rubles., net profit of 413 million rubles, as the SPARK data shows. The turnover of “L’etoile” in 2015 amounted to 72.5 billion rubles, “Rive Gauche” — 32 billion rubles., as estimated by the agency.
Russian cosmetics market (2.2% of global), ranked fourth in the world after Germany, France and the UK, says a Board member of the Russian perfumery-cosmetic Association Anna Dycheva-Smirnova. The attractiveness of the local market is due to demographics: one-third of the population — women aged 20-60 years, the most active consumers of cosmetics, says Dycheva-Smirnov. Their average annual spending on cosmetics is about $192, for personal hygiene and beauty spend is up to 30% of salary.