L’Oréal has chosen an experienced insider, Nicolas Hieronimus, to succeed its long-serving chief executive in a transition that will take place in May next year.
The board of directors of the world’s biggest cosmetics company announced the decision on Wednesday. Jean-Paul Agon, who has been chief executive since 2006, will stay on as board chairman, a role he has held since 2011.
Sophie Bellon, an independent director who heads the appointments and governance committee, said the board had been working on the succession for more than 18 months and had interviewed several candidates. “Nicolas Hieronimus emerged as the most legitimate candidate,” she said.
Mr Hieronimus has spent his entire career at L’Oréal and was widely expected to take over after being groomed as successor. In 2017 he was named deputy chief executive in charge of the group’s luxury, skincare, and professional divisions, which bring in about 45 per cent of sales.
He will take over at a delicate time for the maker of Lancôme cosmetics, Garnier hair care and La Roche-Posay skincare products. After years of strong growth led by expansion in China, L’Oréal’s momentum was halted by the coronavirus pandemic.
Sales at the French company fell 11.7 per cent in the first half of the year to €13bn. Net profit fell by 13 per cent to €2.1bn.
With consumers avoiding stores because of the virus, ecommerce sales jumped by 65 per cent in the same period. But that was not enough to offset the lower demand caused by consumers’ more circumscribed pandemic lives where products such as lipstick, foundation or perfume might seem superfluous when people are often stuck at home.
L’Oréal has been trying to stoke demand with more product launches and marketing campaigns. It also recently announced it would lay off about 400 people and close some stores belonging to its luxury business in the US. The company employs about 88,000 people worldwide.
L’Oréal shares have risen almost 10 per cent this year, closing at €290 on Wednesday. They have outperformed a 1 per cent decline for the MSCI Europe consumer staples index and a 17 per cent slump for the French blue-chip CAC 40 index.
Bruno Monteyne, a Bernstein analyst, predicted in a note that investors would react favourably. “The uncertainty surrounding the departing CEO has left a cloud over the stock recently, and this news should be reassuring in that this signals a high level of continuity . . . This should help to alleviate concerns that the new CEO would spell a change in strategy.”