PARIS — Call it the beauty CEO shuffle.
Especially since the beginning of this year, there has been a plethora of board changes at the highest level.
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L’Occitane Group, Avon Products Inc., Biologique Recherche, L:a Bruket, Susanne Kaufmann, Fresh and Orveon are among the cavalcade of companies – of all types: from small to large, from public to private, in every product category – to just to mention new general managers.
Olaplex, Amika, Avon Products Inc., Beautycounter, Eighth Day, Fresh, Orveon, Harklinikken and Fekkai, among others, will also have recent C-suite recruits.
A combination of phenomena led to these appointments.
“Beauty is an incredibly dynamic category, and with the scale of change that companies and brands must keep up with, shifts in leadership can sometimes help support brands as they evolve to adapt,” said Sasha Radic, managing director at Jefferies .
The beauty market is also very competitive. “And competition has only increased over the past three to four years,” said John Long, a North American retail industry leader and senior client partner at Korn Ferry.
Market saturation makes it more difficult for beauty makers to have truly differentiated propositions.
“It’s that level of competition that creates a challenge for any CEO to not only maintain their market share, but also grow their business – and the pie only grows so much,” Long said. “So it’s clear that you have to be well positioned going forward.”
He described 2023 and 2024 as “reset years.” “These are years in which companies are [asking]: ‘Do we have the right leader for the company, given the mandates we want to drive going forward?’” Long said. “Certainly with COVID-19, there was a tendency not to do too much that would proactively disrupt management teams.”
After the corona pandemic, which was a very strong period for many consumer-oriented companies, boards and investors are looking for profits.
“Last year was pretty lackluster in retail overall,” Long said. “There was growth, but if you ignore inflation, growth was muted for the most part. So as we head into 2024, the focus for investors is on growth.”
Because there were fewer mergers and acquisitions as COVID-19 unfolded, they are now increasing, especially for private equity in the beauty sector.
“We expect to see more transactions in 2024 and 2025 than we saw in the last two years,” Long said.
Anne Raphaël, managing partner at Boyden, noted that private equity is expected to increase investment momentum in the beauty sector in the near term.
“Beauty has always been – and increasingly is – a very good business to invest in if you have the right brand and the right team,” she said.
It remains crucial to continuously transform the business, with innovations such as product introductions and evolutions in retail, including services.
“As a position, being a CEO is incredibly complex,” Long says, adding that if investors don’t see growth in a beauty company this year or last, they might look for changes in management.
“Another thing to think about is that the skills you need as a CEO to weather the disruption of COVID-19 are not necessarily the same skills you need now to grow the business,” he said. ‘It could be possible, you could succeed. It’s just that some CEOs won’t be as equipped to deliver on a growth mandate as others.”
A few CEOs have felt like they are ready to move on from the COVID-19 pandemic because it has been such an intense period. The health crisis caused changes for people personally, but also for companies and the way brands interact with consumers.
“That is reflected in shifts in leadership, in shifts in management and the dynamic needs of running a beauty brand today,” Radic said. “It all comes together and is also reflected in a changing landscape of brand leadership.
“Each situation is specific to the company,” she continued. “The reason behind the management shift at one brand is not the same as at another.”
“They all have a different explanation and justification,” agrees Joël Palix, founder of boutique consultancy Palix Unlimited.
CEO changes are nothing new to the beauty industry.
“It is often the case that brands develop and bring in leaders,” says Radic. “Typically, the leaders you have from the early stage to a slightly larger scale are not the same leaders you have once you scale it from an early stage to a significantly larger company. Moreover, sometimes people just retire.”
“Sometimes it’s more of an evolution in the organization – where you go from founder to CEO,” Palix continued.
This is the case, for example, at Biologique Recherche, Harklinikken, Fekkai and Eighth Day, where Jean-Guillaume Trottier, Stuart Miller, Tennille Kopiasz and Savannah Sachs respectively arrive to take over.
In some cases, when the founders stay, the CEO role is a new kind of role, Palix explains.
Other times, ownership of a brand changes, and that can result in a new CEO appointment, as with The Body Shop. Some groups, such as Amika and Avon, have promoted internal executives – Chelsea Riggs and Kristof Neirynck.
Gregg Renfrew returned as CEO at Beautycounter, the brand she founded in 2013 and left a year ago.
Amanda Baldwin succeeded JuE Wong at beleaguered hair care brand Olaplex, with investors believing a management change was necessary for the brand’s turnaround.
Meanwhile, Orveon, the parent company of BareMinerals, Buxom and Laura Mercier, owned by Advent International, has appointed Neela Montgomery as CEO.
As the beauty market has changed over the past two years, the needs of companies have reflected that. Still, some tenants remain intact. The success of a beauty brand has to do with its DNA, fundamentals, products, scale and scalability, a source said.
The first two elements are crucial if a brand grows net sales to 5 million euros, and from 5 million euros to 15 million euros. (Many brands today have reached the 5-10 million euro sales threshold.) However, scaling from 15 million euros to 40 million euros or 50 million euros is a completely different story.
The CEO who grows a beauty company to €15 million does not necessarily have all the expertise to take the brand to the next step and level, especially in today’s challenging environment.
“[For a beauty CEO], you have to have a lot of expertise in different things,” said an industry source. “A lot has changed in the past 24 months. There has been a massive increase in competition post-COVID-19; we have seen many brands emerge. It is a very busy market at the moment.”
Other brands that have been purely direct-to-consumer have less of an advantage than they did during the pandemic, as others have filled the void with their DTC approach.
Some believe this is the end of the DTC-led playbook. Over the last five to 10 years, there’s been a crystallization of what the playbook should grow, which is around performance marketing-led, digital marketing-led customer acquisition, and the fact that paid media would drive a lot of that conversion.
Unit economics and media costs no longer support that playbook, so there is a shift to brand marketing in the traditional sense of the word. That’s where a CEO’s experience comes into play, including in omnichannel communications and retail distribution channels, now that the role of the wholesaler has returned.
Not all brand leaders have been agile enough to change gears or have been too loyal to one vision, some industry sources believe.
The mindset of a CEO is important. “They must have a clear openness to all new trends and changes,” says Edouard Thoumyre, managing partner at Accur Recruiting Services. He also noted how beauty today is becoming increasingly closely linked to the hospitality industry and the experience it offers.
In addition, there is a challenging micro-economic climate, with problems in Asia and the travel industry, for example.
“All this makes scale even more important, and that means having strong omnichannel and international expertise, as well as a very strong marketing and business strategy mindset,” the industry source said.
To build a sustainable beauty company that meets the sales threshold of 40 to 50 million euros – when the strategic players become interested in potentially acquiring brands at a high valuation, such as five times sales – the key is to have a century-old business model, strength in multiple retail channels and geographies, and strong execution of marketing strategy.
Numerous newly appointed CEOs at companies like Biologique Recherche, L:a Bruket and Susanne Kaufmann come from large groups where they successfully grew brands at companies like Estée Lauder Cos.
Raphaël noted that they all have an international profile and a strategic vision, while maintaining a healthy mix with creativity, specificity, brand DNA and the right level of scale.
Ada Lien, who was named CEO of Fresh at LVMH Moët Hennessy Louis Vuitton, is another Lauder alumna.
Executives recruited from large groups also tend to have a strong entrepreneurial drive for execution and marketing strategy, in addition to rigorous training, the industry source said.
Additionally, some of these executives are attracted by the potential to join a much smaller brand and be part of the story of scaling the company, possibly with a possible eventual sale, the industry source continued.
“Many of the recent appointments have had very strong international sales backgrounds,” Thoumyre said.
Laurent Marteau, recently appointed CEO and managing director of L’Occitane Group, is one of them. He previously served as La Prairie Group’s vice president of global travel retail and specialty channels and as a member of the board of directors, before becoming vice president of Europe, the Americas, the Middle East and Africa.
“A good CEO is not easy to find in beauty,” says Palix. “Beauty requires people to have soft skills, but also hard skills, because you have to manage the business and deliver results.
“It’s almost like running different types of businesses because on one side you have products: retail and service. You need to be agile between these three – and comfortable with digital and technology,” he added. “It takes a lot of skills.”
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