Earnings Transcript for LRLCY - Q4 Fiscal Year 2019

Jean-Paul Agon: All right. So normally, we are right on time. So good morning, everyone. We are very happy to see you again. So in front of you today, you have the team. So I will start with the left. Cyril Chapuy, our new President for the Luxury division, first time for him today here; Nathalie Roos, the - who you know already, President of the Professional Products Division; Nicolas Hieronimus, who you know also very well, Deputy CEO in charge of the divisions; Christophe Babule, our new CFO, not that new anymore because 1 year already in the job; Brigitte Liberman, who you know well, too, President of the Active Cosmetics Division; and Alexis Perakis-Valat, President of the Consumer Division. So one minute for Jean-Régis for the housekeeping details, and then we'll start.

Jean-Régis Carof: Good morning, ladies and gentlemen. So we are very happy to welcome you to this presentation of our annual results. First, let's have a quick look at the agenda of this meeting. Christophe Babule, our CFO, will kick off with the presentation of the financial statements for 2019. Then Nicolas Hieronimus, our deputy CEO, followed by each Head of Divisions will summarize the highlights of his or her division for 2019 as well as prospects for 2020. After the divisions' presentations, Jean-Paul Agon, our Chairman and CEO, will share with you his perspectives regarding L'Oréal's business and prospects. Then we will move directly to the Q&A session up to the end of the meeting. That's until around 11. Afterwards, a light cocktail reception will be served in the club salons on the first floor, which is at the left when you leave this room. Now I require one more minute of your time as I would like to draw your attention onto a couple of points. First, a reminder of the safety instructions, which you need to be familiar with. They are behind me. Second point, I would like to ask you to read the disclaimer on the last page of the booklet you've been given at the entrance of this room. Third point, there is a Wi-Fi coverage over the campus so that you can connect to the Internet. Please use the login and password shown on the screen behind me. This meeting is held in English with a simultaneous translation into French. Headsets are available at the entrance to the room. French can be found on Channel 1. If you so wish, you may connect to it right now. Of course, if you feel more comfortable in French, you can ask your questions in French, and we will answer in the same language. Point number four, during the Q&A session, we kindly ask you to state your name and company name as clearly as possible before you ask your questions. In addition to your questions, we will take some questions sent by e-mail. We ask our fellow journalists to be so kind as to raise their questions during the second part of this Q&A session. Last point, the entire meeting is broadcasted live on our dedicated website, www.loreal-finance.com. The recorded webcast of the meeting will be available in the Presentations and Webcasts section of the same site in the afternoon, I thank you for your attention and wish you a pleasant meeting.

Jean-Paul Agon: Thank you very much, Jean-Régis. Christophe, please?

Christophe Babule: Ladies and gentlemen, good morning. The presentation of L'Oréal's financial results for 2019 will include information about sales, profits, cash flow, balance sheet and dividend growth. Consolidated sales amounted to €29.9 billion, up 8% like-for-like. At constant exchange rates, sales increased by 8.8%. Acquisitions had a positive impact of 0.8%, mainly due to the acquisitions of the Korean brand, Stylenanda; and of the German company, Logocos, in 2018; and of the Valentino license in 2019. After taking into account a positive 2.1% currency impact, reported sales grew 10.9%. It is worth noting that the currency impact remained the same through the year at around plus 2%. It is, of course, too early at this point in time to forecast precisely what the currency impact will be in 2020. However, I can tell you that extrapolating the current exchange rates, i.e., for the dollar, €1 equaling $1.10, we have a very slightly positive impact on 2020 full year sales. Currencies. The euro represented 21.7% of consolidated sales. Note that 10 years ago, the euro represented more than 34% of sales. The weight of sales realized in dollars at 23.5% was stable versus 2018. In 2019, the changes in our main invoicing currencies were as follows

Jean-Paul Agon: Thank you very much, Christophe. So now Nicolas, about the divisions.

Nicolas Hieronimus: Good morning. With a plus 8% growth in 2019, L'Oréal overperforms at 1.5x the market with a strong Q4 at plus 9.6%. Three divisions out of 4 are beating their markets. They are all growing and accelerating. The key factors of this performance across divisions are the power of our brand portfolio, the acceleration in skincare, our products and services innovations and our O+O, online plus offline, strategy. First, our brand portfolio is getting stronger than ever with our biggest brands in continuous acceleration. Our billionaire brands have grown plus 9.1% this year above the group's average. La Roche-Posay has joined this very private club to become our ninth billionaire brand. L’Oréal Paris is more than ever the number one beauty brand in the world, and Lancôme, the number one luxury beauty brand in the world. These brands combine the agility they have adopted from indie brands and the power of their scale and hero products or mega franchises, reaching impressive growth. Génifique, La Vie est Belle, Anthelios and Revitalift are now the size of some global brands. We are also building the future with new seeds such as Stylenanda; Valentino; from 2020, Mugler and Azzaro; and from 2021, the Prada license. And in 2020, we are optimizing the portfolio with the transfer of Carita to L'Oréal Luxe to satisfy the growing appetite for premium skincare; and of Decléor to Active Cosmetics to better leverage the wellness trend in skincare; and the sale of Roger&Gallet, which did not fit our strategy. Our brands also evolved to answer the new consumers' expectations in terms of values and commitments. They all pledged to be fully inclusive, representing all types of beauties. They all improved their sustainability, the sustainability of their new products, whether through packaging reduction or formula improvements. Each brand will also commit to important environmental or societal causes, such as the fight against sexual harassment, women's illiteracy or domestic violence. Finally, brands will reinforce the long earned trust of consumers by bringing always more transparency on product composition. This year, L'Oréal launched Inside Our Products, an open access to its ingredients strategy on its corporate sites, and this is progressively cascaded to all the brand sites. A second driver of our performance is our skincare acceleration, with a fantastic growth at plus 20% in all three divisions in a skincare market that has accelerated over the last two years. The skincare market is boosted by several factors, such as the impact of exposome, external factors and UV on skin aging and allergies, the aging of the population as well as the growth of Asia where skincare is by far the largest category. Makeup faced a slowdown, particularly in the Western world. The nude makeup trend has impacted the makeup artistry and specialist brands. Overall, L'Oréal performed at plus 3% on this market, thanks to the success of luxury brands in Asia, the great performance of Stylenanda and on-trend products, such as Bare With Me from NYX or CC from IT Cosmetics. Third, thanks to the power of our R&I investments and creative marketing, our innovation capacity is a major competitive advantage. And 2019 has been another [Foreign Language]. Its stronghold categories, as you can see on the screen, with examples such as Kérastase's Blond Absolu; Libre and Idôle in fragrance; or YSL's The Slim in makeup; and many strong innovations in skincare, science-driven innovations with the new Génifique microbiome, with L'Oréal Revitalift filler ampoules or Skinceuticals' Discoloration Defense or K Water from Kérastase; nature-driven innovations with Garnier BiO, Kiehl’s Calendula Water Cream or the Fructis Hair Food line; and tech-driven innovation with the development of skincare oil foundation diagnosis both online and offline, and Perso, our skincare and makeup personalization project which was awarded recently at CES. More and more, beauty will be about products and services about nature and tech. Which leads me to our fourth growth engine. The group is now operating in an O+O, online plus offline model, seamlessly addressing the consumers in both worlds and thus combining experience, convenience and accurate targeting. The group has become a digital-first company and the digital leader in the industry with digital media accounting for around 50% of our total media spend. Digital is a unique instrument for communication, consumer engagement and advocacy. It is also a new way to sell products through influencers with the emerging trend of social commerce. E-commerce has experienced another year of very high-growth at plus 52%, whether with e-retailers, pure players and our own brand e-stores, reaching, in total, almost 16% of our sales. The experience provided by our brands continues to develop in the brick world, whether in Travel Retail where the group has increased its leadership through frequent events in the airports; and in our flagship stores, such as Lancôme on the Champs-Élysées in Paris or many others in Asia. Online and offline are connected. They are both sides of the consumer journey, powered by services such as ModiFace and data management. We have 1.3 consumer - 1.3 billion consumer data points compliant with privacy requirements, which allows us to provide them with a more personalized experience and boost their lifetime value. To conclude, with these 4 growth engines

Jean-Paul Agon: Thank you, Nicolas. So let's start with the queen of the year, Brigitte Liberman. At L'Oréal, we can have a different queen or king every year. So in 2019, it was Active Cosmetics and Brigitte.

Brigitte Liberman: Good morning. 2019 has been a historic year for L'Oréal Active Cosmetics. We achieved a record growth of plus 15.5%, our strongest growth in the last 20 years. It's true that our dermocosmetics market is very dynamic, even accelerating with a growth of around plus 7%. This acceleration reflects the constant evolution of consumers' expectations towards more health. We managed to grow twice as fast, significantly reinforcing our leadership. What is really remarkable is that all regions, all channels and all of our global skincare brands contributed to this growth. Asia is at plus 38%; but also North America, plus 21; Latin America, Africa, Middle East and Eastern Europe, we got double-digit growth; and Western Europe is at plus 4.5%. In terms of distribution, e-commerce grew at plus 55%, and at the same time, drugstores, parapharmacies and Travel Retail are all enjoying double-digit growth. I would like to emphasize 3 key success factors which explain these results. First, our complementary brand portfolio which meets all needs of health-conscious consumers, from skin pathology to aesthetics, and at all price levels from accessible to premium. With its mission of a better life for sensitive skin, La Roche-Posay once again posted double-digit growth, passing the €1 billion mark. Vichy, with its natural medical positioning, has reaffirmed its leadership in anti-aging in Europe. SkinCeuticals, our medical aesthetics brand, and CeraVe, the number one skincare brand prescribed by dermatologists in the U.S., have both accelerated in every region with global growth above 40%. The second key factor, our innovation, thanks to science and digital technologies. We offer innovations to personalize skin health management and improve the quality of life of our consumers. With Effaclar Spotscan, La Roche-Posay uses artificial intelligence to offer an instant diagnostic tool validated by dermatologists that measures acne severity and proposes relevant skincare routines. Based on dermatological expertise and using augmented reality technology, Vichy launched the SKINCONSULT AI. This app evaluates the 7 signs of aging by taking a simple selfie and defines personalized advice. Last example, SkinCeuticals Discoloration Defense is a first-of-its-kind serum, featuring a maximized concentration of tranexamic acid to correct and prevent this coloration disorders. Finally, we keep on reinforcing a relationship of trust with more than 160,000 doctors. These partnerships allow us to create and test relevant products for their patients. In 2019, the World Congress of Dermatology, which gathered around 13,000 dermatologists in Milan, was a great opportunity to showcase our expertise in dermocosmetics and to give 5 awards to support social initiatives led by dermatologists all around the world. Health is the future of beauty. That is our conviction and our answer to the consumer search for more efficacy, more safety, more trust, more professional endorsement. In 2020, we start the year with two innovative launches

Jean-Paul Agon: Thank you very much, Brigitte. So now please, Nathalie, tell us about the recovery of the Professional Products Division.

Nathalie Roos: Good morning, ladies and gentlemen. In 2019, the Professional Products Division grew above the market and gained market shares with plus 3.2% on a market that was 2.5%, accelerating at plus 3.9% in the second half. The division confirms that its transformation strategy, in sync with the changing world of hairdressing, is bearing fruit with continued progress. In the U.S., we grew significantly above the market at plus 5%, thanks to our modernized distribution network, SalonCentric, that allows us to reach all our clients, salons and independent mobile stylists. Asia Pacific is accelerating at plus 11% and is now playing a key role as a growth driver for the division, with India, our biggest Asian market, at plus 17%; and China, at plus 46%. Eastern Europe pursues its momentum at plus 4%. Western Europe continues to strive in challenging market conditions but has returned to positive growth in the second half in major markets such as Germany, at plus 2%; and France, at plus 6%. And e-commerce at plus 38% is contributing to the growth of the division worldwide. Our haircare business is boosted by the outstanding performance of Kérastase at plus 15%, thanks to the fantastic launch of their new range, Blond Absolu; the confirmed success of in-salon personalized services, Fusio-Dose; and the branch development in selective perfumeries like Sephora in the U.S. Kérastase is asserting itself as the reference brand for professional luxury haircare. Hair color continues to be dynamic, supported by our portfolio of unique technologies. Redken's tone and tune Shades EQ records another striking year. L'Oréal Professionel celebrated 10-year anniversary of its unique ammonia-free permanent hair color, INOA, notably with the launch in Japan, and continues to boost its growth with its toner, Dialight. Pulp Riot proves its potential, climbing at plus 52%. In 2020, we expect to further outperform the market. We will move the market with major innovations, starting now with the worldwide rollout of our new Majirel, our number one franchise from L'Oréal Professionnel. We are making Majirel more visible and desirable across channels through clearer and more appealing packaging, new education and further reaching communication. We've just released Kérastase Genesis, the first haircare range with the double effect of reducing hair fall and caring for beautiful hair. We will continue to adjust to our professional markets' new reality, consumers buy in omnichannel and stylists becoming more and more mobile and independent, which is why greater digitalization of the omnichannel consumer journey would be key in salons, with our Salon Emotion program now deployed in 40,000 salons worldwide; and at every online touchpoint, where we will provide a great number of consumers with a qualitative professional experience of diagnosis and advice. We will also step up the support we give to our stylists, leveraging the new B2B e-commerce tool, L’Oréal Partner Shop, and our global e-learning platform, L'Oréal Access. And to drive the professional market of the future, we have inaugurated our school, Real Campus by L'Oréal in Paris, and the first-ever bachelor degree of hairdressing and entrepreneurship. We have created this program to attract the best talents to the profession and train the next generation of tech-savvy entrepreneur stylists. 2020, we see the continuity of our strategy and the amplification of our performance. Thank you for your attention.

Jean-Paul Agon: Thank you very much, Nathalie. And now the big division, Alexis, that accelerated in the last quarter nicely.

Alexis Perakis-Valat: Good morning, ladies and gentlemen. In 2019, the beauty mass market grew around 4% worldwide, dynamic both in China and the emerging world, more challenging in Western Europe. Our division finished the year up 3.3%, continuing its gradual acceleration since 2017, and closing with a better Q4, up 4.4%. The first highlight of 2019 is our performance in the dynamic New Markets, especially to the East. We were up 19% in Asia Pacific, with China leading the growth, and double-digit in India, Indonesia and Korea, to name just a few. We also had a good year in Eastern Europe, especially in Russia and Turkey. In Western Europe, though market has been pretty sluggish, but we managed to improve our performance. On the other hand, the U.S. and Brazil had a negative year. In both markets, we have now put in place new organizations, refocused our category strategy and strengthened our innovation plan with some early encouraging results. The second highlight of last year was the good performance of our 2 biggest brands. L’Oréal Paris, the world's number one beauty brand had its best year since 2007. Garnier is back to growth. And in addition, our newly acquired brand, Stylenanda, is booming following its very successful launch in China. The third highlight has been the strong acceleration of skincare at plus 18%. The great thing about this acceleration is that it is truly broad-based across brands and geographies. The fourth highlight has been e-commerce, which grew by 55%, almost twice the market pace. Just one striking example of how we're riding this wave, L’Oréal Paris was the number one beauty brand for those 11.11 Singles' Day in China last November. So looking ahead into 2020, we are determined to beat the market. To get there, we've built a plan around 4 powerful growth engines. First, the power of our brands. L’Oréal Paris has the potential to accelerate even more, thanks to its unique positioning as accessible luxury and its mission of women's empowerment. Garnier is pioneering green beauty, innovating in green science, green packaging, green sourcing and manufacturing. And Maybelline is taking the latest makeup innovations from New York all around the globe. The second engine is the power of innovation across our brands. L’Oréal Paris is following up on its hyaluronic acid success with the launch of the new Revitalift glycolic acid in both ampoules and serum. Garnier is going to launch some great green innovations, such as the Fructis Hair Food shampoos and conditioners 98% natural. Maybelline, already the worldwide leader in mascara, is launching a new blockbuster, Lash Lift, inspired by the latest professional eyelash enhancement techniques. The third engine is the power of digital. Digital is truly a game changer for us also because it's a way to provide service in a self-service environment. Take hair color. It's not easy for a woman in a hypermarket to choose the right color for her. Now thanks to ModiFace and our partnership with Google Lens, she simply scans the product on the shelf to see how it looks on her. Consumers also crave personalized skin care advice. Now with Skin Genius by L’Oréal Paris, our new AI-powered diagnosis tool, they can use their smartphones to get the best advice in real time. The fourth growth engine is the power of our new transformation program. We call it CPD 3.0, and it has been designed to accelerate our growth, first, by rolling out big innovations faster. Elvive Dream Lengths has been a great hit everywhere and is being launched as we speak in the most spectacular manner, both in the U.S. and Brazil. Going forward, every major innovation will be deployed internationally within maximum 12 months. The second objective of CPD 3.0 is to better serve emerging markets. For these markets, we've created dedicated transversal teams in marketing, operations and research. Thanks to this new organization, we'll be able to deploy in the next 3 months, a brand-new Garnier skin line across the Southern Hemisphere. Brazil will obviously be one of the key countries benefiting from this. And the third objective of CPD 3.0 is to improve our sales and retail excellence. Our goal is to become the preferred partner for our retailers on and offline. To achieve that, we have clarified roles and responsibilities and advanced our innovation time lines so that countries can focus entirely on go-to-market excellence and play their roles as category leaders with their retail partners, as we've done successfully with Carrefour in France, for example. We believe CPD 3.0 will be truly transformative for the division and will boost the power of our three other growth engines. So today, we are perfectly set to seize the major opportunity of the new decade

Jean-Paul Agon: Thank you very much, Alexis. And to finish, Luxury, which had a very nice year also in 2019.

Cyril Chapuy: Good morning, everyone. 2019 has been a very strong year for L’Oréal Luxe. Our net sales surpassed the €11 billion level this year, growing by 13.8% like-for-like, with a clear acceleration on the second half

Jean-Paul Agon: Thank you, Cyril. So I would like now to highlight the main takeaways of 2019 without trying to repeat what you have been already told and share with you our prospects for this year and the next future. 2019 was, as you could see, another very good year for the beauty market and also a very good year for L'Oréal as we enjoyed our best growth in 12 years. First of all, I would like to share with you some insights on the beauty market, which remain very dynamic. We believe it grew between 5% and 5.5%, more or less in line with last year, the year before. The growth of the market was driven by the same economic, demographic and sociological fundamental evolutions, globalization, growth of the middle classes and the upper classes, aging of the population, men's consumption, et cetera. But on top of that, other factors have contributed to the acceleration of the market growth this past 2 years

A - Jean-Paul Agon: Celine, as usual, you deserve now the role of first question. Can you give the mic, please, here? Yes. We should offer you a microphone so that you can have it with you always to start the first question.

Celine Pannuti: So just to rebound, my first question will be on China, just to rebound on what you said. Is there any early details you can tell us in terms of your business, whether you have had any recent feedback from your teams on what's going on in the country? And looking at 2019, there seem to have been an acceleration in the fourth quarter in China. So what has driven that consumption? And if you could share the Chinese number for 2019 in terms of growth. My second question is North America, which has decelerated. And L'Oréal underperforming in a market that you said was growing at 2.5%. What should we expect in order to turn around this performance? And would it mean that 2020 will still be in a negative territory?

Jean-Paul Agon: All right. So you are covering many subjects already with this question. Well, first, you know that - or you don't know, so I will let you know that our offices are all closed in China because for us and for many other - for everyone, the Chinese authorities decided to extend the 1 week vacation of the Chinese New Year to another week. So in fact, all our offices, factories are closed until Monday. And so we are not, of course, right now, having interactions with our Chinese teams. This will start next week. So honestly, we can't say much more than what I just said. What we know is that we had a good January, and - but since the extension of the epidemic, of course, the sellout has become much more difficult. We have all seen images of Chinese cities that are empty. And of course, it doesn't help sell out in stores. I would say that one good thing is that we are very strong on e-commerce in China. We are probably the strongest player in China on e-commerce, it was almost 50% of our business in China last year. Not the same for some division, 60% for consumer division. I think it's 35% or something like that for Luxury. So e-commerce will definitely help as people can order products to be delivered to their home. But it certainly will have an impact in the weeks to come. So for the moment, we don't know more than that. And we will, of course, first, be very close to our Chinese teams, that is the priority. The good news that I can share also is that no one - we have 12,000 people, 12,000 employees in China and also 12,000 BAs in the stores, and I'm in communication every day with a General Manager of China and he told me that no one in our teams is - has a problem, is sick. So that's a very good news. And our priority, of course, first is to make sure that our teams are very protected and healthy. And so we will, in the coming weeks, have the opportunity to work with the teams, the Chinese teams and elaborate the right strategy and make some assessments on the future business. All right. So for the business that we had in China. We had a very good year in China. All in all, around plus 35% last year. And I will let maybe each division to comment because it's a very strategic market. I would just let you know that one of the reasons of the acceleration in - on the last quarter was the very amazing success that we had with 11/11 and 11/11, the Single's Day is becoming a major event in terms of business in China. By definition, it happens in November. And so this has a very strong weight on the business of the last quarter and is also a reason of the acceleration to the sales. Maybe, Nicolas, you want to say something or Cyril maybe? Cyril, so for luxury?

Cyril Chapuy: Look, the year, the 2019 year was a strong year in China for sure. It was a year at plus 39% for the L’Oréal Luxe division. Our strength in China is, first and foremost, the portfolio of our brands. We have 4 brands in the top 10 of the Chinese market and all 4 grew very strongly. We are, as Jean-Paul mentioned, very strong in e-commerce also, and 11/11 was a very, very strong moment of the year. Our teams, our local teams, master very well what we call the hallmarks, which are these festival moments, which are very important in the business life of China, and we mastered them pretty well. So the year was pretty strong across brands and across channels.

Jean-Paul Agon: Thank you, Cyril. And Nathalie?

Nathalie Roos: The same for us, very strong year in China. We are growing both in salons and in e-commerce with our partner, Tmall, and our growth is driven by our both brands in China, L’Oréal Professional on coloration; and Kérastase under professional luxury haircare.

Jean-Paul Agon: Thank you. Brigitte?

Brigitte Liberman: The division had a very, very strong year with plus 54% on a very dynamic Dermocosmetic market driven also by e-commerce. SkinCeuticals ranked today the number one brand in the clinic channel. La Roche-Posay grew double-digit. And CeraVe is enjoying very good initial results, improving month after month. So a very good year.

Jean-Paul Agon: Alexis?

Alexis Perakis-Valat: Yes. Our teams in China did a great year at around plus 30% what's interesting is to compare it with the growth of the market, the beauty mass market in China grew around plus 10%. So they grew almost 3x the market, which is a really very good performance. Maybe two things to highlight. First, the performance of L’Oréal Paris that is the number one beauty brand in China, and that is growing extremely fast and much, much, much faster than the market, which shows that even in a very digital market, the big actually get bigger. And the second highlight is the very strong start also of our acquired brands Stylenanda, which we've launched first on Tmall, and we've launched one flagship only in Beijing last November.

Jean-Paul Agon: All right. So great year in China. And so we'll do our best to continue this momentum, of course, after a period, that will definitely be impacted, obviously. So the other question is the U.S. So on the U.S., as you saw, we had not such a good year. The market was a bit slower than before. And maybe also, I can ask every division, do you want make a comment, a global comment, on the U.S.? Any color maybe?

Nicolas Hieronimus: Yes, maybe I can say a word on the U.S. market. Overall, what's very clear is that the U.S. market has decelerated in general in 2019. It was around plus 4% in 2018. It's halved, 2% to plus 2% - around plus 2% in 2019. So deceleration in the market, which was particularly visible and strong on the makeup market. If you remember, the year 2016 and 2017 were extremely dynamic on the makeup market with extreme color bohemia and boom on the indie makeup brands. These categories has been flat in '18 and negative in 2019. And it has, obviously, been true, both on the selective and on the mass market, and it's a category we're pretty exposed to because that's where we have our biggest brands. Skincare is okay. And we've had a pretty good year on skincare. And the other categories are also in the plus 2s, around plus 2s. So it's true that the market is slower. We've had 2 great performances, which can be highlighted, but it's true that ACD and the Professional division have had a very good year in the U.S.A. It's been harder for CPD and Luxe, both overweighted in makeup. And also overweighted for the case of luxury in the traditional department store world, which is in stronger difficulty today in the U.S. market. But the divisions can explain. They've all put in place strong plans, strong focus on skincare, obviously, which is a growing category, and also acceleration in e-commerce, which will be a strong accelerating factor in the U.S.A., where we still have some work to do.

Jean-Paul Agon: So thank you, Nicolas. Maybe, Brigitte, because you have had a fantastic year in the U.S. last year?

Brigitte Liberman: Yes. Yes, we had a very strong performance. I would say, in off-line and in online. Online represent today 23% of our total sales. What is quite remarkable is the result of CeraVe. We achieved new records driven by distribution gains and confirming its number one position in prescriptions by dermatologists. SkinCeuticals, also very strong, thanks to innovation but also opening of new flagship in aesthetic clinics. And we have two retail brands, La Roche-Posay and Vichy that are performing very well. So all in all, it was a very, very strong performance.

Jean-Paul Agon: Thank you, and a very good year also for Professional.

Nathalie Roos: Yes. First, the U.S. is by far the biggest Professional market in the world and is quite dynamic. And this market is driven by new forms of hairdressing services, especially hairdressers becoming more and more mobile and independent. About 60% of them are now working independently in suites, or co-working spaces, or at home - or delivering home services. And thanks to our salon-centric distribution network that we have modernized in the last couple of years, we really have the right tool to reach all these clients. We have field forces, very large. We have more than 600 stores, and we have B2B online, which allows us to really reach all our clients.

Jean-Paul Agon: Thank you, Cyril, maybe luxury in the U.S.?

Cyril Chapuy: All right. Luxury, I will insist on what Nicolas mentioned i.e. we had a minus 2% because of 2 main factors. One is overweight in makeup, which is the category which is decreasing right now. And we have some of our brands like Urban Decay, which suffered from the change of trends. So we are working very actively in repositioning those brands to bounce back. And second reason of the performance, which is a disappointing one for us, is the overweight of traditional department store channels like Macy's for more traditional brands like Lancôme. So our plan is clear. Acceleration of skincare. We had a very strong year in skincare but we need to excite furthermore. Kiehl’s, for instance, had a fantastic here in the U.S., gaining market shares, both online and off-line. And second, acceleration in e-commerce. E-commerce is already 22% of L’Oréal Luxe sales in the U.S., but we think it can accelerate furthermore.

Jean-Paul Agon: Thanks. And the consumer division?

Alexis Perakis-Valat: Yes. For us, the diagnosis is pretty similar with L’Oréal Luxe makeup market and the channel footprint to - we're addressing these issues first by a new organization that we've put in place, especially focused on helping our traditional retailers’ ramp-up their beauty aisle and also acceleration on e-commerce, which is a very big priority. And then the second thing around the makeup market, it's also - we see it also as our responsibility to re-dynamize it, and that's why we're launching new innovations that are adapted to the new looks that women want in the U.S., like Bare With Me on NYX or like Lash Lift on Maybelline. It's very early to see results because resets in the U.S. take place once a year and will take place progressively in the Q1. What is encouraging is on skincare, where we've also decided to accelerate in the U.S. The reset have been done earlier, they've been done in November. And here, we're seeing that our innovations performed very well and that we're gaining market share on skincare, particularly on the L’Oréal Paris brand.

Jean-Paul Agon: All in all, I have to say that we are not worried regarding the - our business in the U.S., we have been in this country for more than 50 years, maybe 60 now. It has - we started from scratch. We are now by far number one. We are twice the size of the number two and this has been done year after year, and it was never a completely steady progress. There were years of important progress, there were years where we're plateauing. And so this is a long work, and we have very strong positions. We have the ideal portfolio for the U.S. market, and we are very confident on our capacity to grow again, gain market shares in every division. Other question? Eva, please?

Eva Quiroga-Thiele: Yes, I have two questions, please, Jean-Paul. In your presentation, you said that one of the successes of L'Oréal is that you spot where the growth is going and you chase that growth very aggressively. And we've seen over and over that, that is working. And this time, in skincare, clearly it has been a great success. At the same time, however, you've lost some market share in makeup. I think Cyril has pointed to the innovation pipeline maybe not being full enough, is that the price you pay for that stunning growth you see elsewhere? Or can the organization be a little bit sharper in how it addresses this? And then the second question is on fragrances. I can't remember any time where we've seen so much engagement in that category, mostly through organic growth. Is that a function of some franchises that you just couldn't resist came up at the same time? Or do you see something different in that market?

Jean-Paul Agon: Okay, good. Thank you. Sharper, I think that we are pretty sharp. When you deliver the best growth in more than 12 years, it's a bit severe to say that we are not sharp enough. But coming from you, Eva, I accept everything. So no, I think it's not because we are concentrating our resources on one part that we are not doing also our job on the other part. And I think also that what Cyril and Alexis explained to you is that the brands - and I explained that also in the past. The brands that we acquired brands like Urban Decay or NYX, when we acquired them, they were right on trend with a certain type of makeup at this time. And there has been a change a little bit in the trend of the makeup recently. And we have just to do the work to change the way that - in terms of new products, in terms of visuals, in term of shades for these brands to adapt to the new demands of the consumers. And this is what we are doing, but it takes a little bit of time. So it is not because we concentrated on skincare that we didn't do the job on makeup, and you will see, I'm pretty confident that pretty soon, we will bounce back on makeup. Having said that, the makeup market is not booming like it used to boom. We really had a period of makeup boom that we all discussed together a few years ago. Now, it's a bit more quiet. The great thing in this beauty market is that when a category is becoming quieter, there is another one that is becoming more dynamic which is fantastic. And now skincare is definitely the great category. But I can tell you that we are not - it's not because we invest on 1 category that we don't invest on the others. Regarding fragrance, maybe Nicolas, you want to say a word on fragrance - or Cyril? Cyril, why are we doing so much on fragrance?

Cyril Chapuy: Well, as I guess you all know, fragrances are very strategic in the luxury business. First, it's a very big business in the Western world, with a steady growth between 4% and 5% every year. It's, for instance, 50% of the Luxe market in Europe. So fragrances are a big business in steady growth in the Western world. Second, fragrances are growing very strongly in Asia. Last year, for instance, in China, fragrances grew by more than 30%. So we think it's a big business, a future business, which is going to get even bigger. And finally, it's a business which is very important to drive the luxe image of most brands. So for all these reasons, we made it a strategic priority for the Luxe division, and we decided to acquire some brands that we thought had great potential ahead.

Jean-Paul Agon: But it's true also, Eva, because you understand everything. It's true also that it was a question of opportunity. When you get a call and someone tells you that he's ready to offer you two new - two beautiful brands, but you discussed and you are open minded, and it's the same for a product. The people of product came to see us, and we thought it was a great opportunity, too. So it's also - it's a good strategy, it's a mix of opportunity and strategic line. Maybe, Nicolas, on makeup, you wanted to add something?

Nicolas Hieronimus: Yes. No, I just wanted to add on the categories, the things that I think are important. First of all, if I talk about skincare, what's extremely interesting for us is that the growth of skincare, I think, is here to stay for long because it's driven by strong fundamentals, the impact of UV, the aging of the population. It's just the sheer weight of Asia on the market, where it's the number one category. So this trend is here to stay. The thing about makeup is that it's a category, which is very linked to fashion, and fashion changes. A couple of years ago, it was all about nail polish. A couple of years ago, more recently, it was all about eye shadows, and a brand like Urban Decay was the queen of palettes. Today, it's more about new makeup and it's another trend, and things are going to come and go. The good thing for us is that our brand portfolio allows us to answer all these trend shifts. Urban Decay might not be the trendiest brand today, but a brand like IT Cosmetics, which is so much about skincare or skin love in makeup is doing very well. We just launched it in Europe. It's already in the top 15 of the makeup brands in the countries where it's been launched, and it generates a lot of interest from consumers. So that's also - the great thing about our brand portfolio is that we can adapt to the trends and in makeup, they change quite regularly.

Jean-Paul Agon: And even the brands can also adapt. If you take a brand like NYX Professional Makeup, the equity of the brand is not to be the brand of the contouring or whatever. The equity of the brand is to be a professional makeup brand. So when expectations and trends are changing, it's the job of the brand to move the innovation, the shades, the visual, everything to satisfy what consumers want. And that's what we keep doing with all our brands. That's why we are absolutely not also worried. But takes a little bit of time. And the great thing in 2019 was that we were doing this, refocusing our brand. At the same time, we had great opportunities in other parts of the portfolio and other parts of the world, which is nice. Okay, Eva? Yes, please.

Jeremy Fialko: Jeremy Fialko, HSBC. So a couple of questions from me. First one is when - could you talk a bit about some of your Asian markets outside of China. So first of all, just a bit more context on how they did in 2019? And then when you look at them a little bit longer term, what you think the potential for some of them to be sort of like mini Chinas and sort of have some of the same characteristics, which you are enjoying in China at the moment? And second question is on e-commerce, now over 15% of your sales. Can you talk about some of the benefits you get from that in terms of things like upselling the customers, repeat purchase rates? If there's any more data or context you'd like to share, that would really helpful.

Jean-Paul Agon: Thank you. Good questions. Maybe I will take the Asia markets. And Nicolas, you can answer on e-commerce. No, no, you're perfectly right because the great thing in 2020 was the acceleration in Asia. Not only in China. And I can give you a few numbers of our growth in other Asian markets that are - those are pretty good. We grew by - let me see, by 16% in Indonesia, by 12% in the Philippines, by 18% in Vietnam, by almost 10% in Korea. It was our best year for a very long time in all the different countries of Asia. And that's why Asia clearly was the - it was a year of Asia in 2019 also because as you saw, it was the first year ever when Asia became the number one zone for L'Oréal. And it's especially dear to my heart because I started Asia almost from scratch in '97 when my predecessors sent me to start the subsidiaries everywhere. And to see that 20 years after, 22 years after, we are number one in Asia. Asia has become our number one continent, it's fantastic. And also, obviously, it is the path through the future. Let's not forget that in Asia, you have between 2 billion and 3 billion people. And so definitely, when all these economies, these people get access to a better income, better - that rise in the middle class or upper middle class, this is a huge reservoir of growth for a beauty company and for us. And on top of that, in most of these countries, as you know also very well, there is a very culture for beauty. A culture of a beauty that has been for hundreds of years in Japan and Korea, but also in all the other countries that are developing right now. So that's why we really believe that the next 10 or 20 years will still be the years also of Asia globally, not only of Asia, of course. I mean I don't want you to think that we are not also, as Eva would say, sharp enough in North America or in Eastern Europe or in Latin America or everywhere. But definitely, there is still a huge reservoir. And I don't know if every country of Asia will be, as you say, a new mini China, but I'm sure that there is this appetite for beauty in every country. And we know it very well. We have subsidiaries. We have also our research and innovation in Tokyo, in Shanghai, in Mumbai, so we are really well positioned to take advantage of all these expectations. E-commerce, maybe?

Cyril Chapuy: Yes. On e-commerce, as you heard, e-commerce has been growing 52% for the group and reaching almost 16% of our net sales. So it's obviously a fantastic growth driver. And it's also a fantastic way to reach consumers everywhere, even where there are no stores. And obviously, in a country like China, which is huge, but it's true also in the U.S.A., it's a fantastic way to give access to our brands. That's - and it's going to continue to accelerate and probably reach quite quickly, 20% of our sales. It's also a new way to engage consumers, which I think fantastic, is that e-commerce blended with the services we offer, such as the ones we have with ModiFace. It's really an incredible way to create an off-line relationship with consumers. Our ModiFace services have been rolled out, as you've seen, as you've heard, on 20 brands, 70 - 71 countries, and they are rolled out, both on our own sites, which are growing extremely fast. But also on retailer sites and create not only engagement, conversion because they increase the conversion by almost threefold, but also, they allow us to know our consumers better and that's the great thing also about e-commerce, particularly our direct e-commerce, is the access to consumer data, which allows us both to know our consumers better and probably to fuel research with new insights and ideas. But also to serve them better, up-skill them or cross-sell within a brand, when we have a direct data, it's very true for Kiehl’s. But also to target them better in terms of marketing when we have cookies through our advertising or e-commerce from retailers, we can better target consumers and make sure that every cent we spend on digital media is really providing the right ROI. So overall, it's a total, what we call an O+O ecosystem. Recruitment, engagement and targeting, and hopefully - and I think it's going to be another major growth driver for the future.

Jean-Paul Agon: Thank you. Yes, please? And maybe later, we'll take a question that we got online.

Richard Taylor: Rich Taylor from Morgan Stanley. My first question, I think, is a topic close to your heart. You've made some pretty bold commitments on plastic packaging reduction by 2025. Can you give us a bit more insight into that? I suppose I'd like to frame the question around how should we think about any increases in costs for packaging as a result? And also on the other side of that, how should we think about any increases in growth as it becomes a competitive advantage? So that's my first question. Secondly, obviously, a year of fantastic growth. But how should we think about growing pains? How are you flexing perhaps through contract manufacturing and your CapEx plans, that kind of thing? Are there any growing pains that we should be thinking about? And then finally, I suppose a topic that doesn't get a huge amount of attention, but maybe you could talk us through the drivers behind the reduction of SG&A?

Jean-Paul Agon: Yes. Okay. No, it has a lot of attention because you saw that we had a very nice reduction of our SG&A. It's true that the fact that the same year, we had a record growth, a record cash flow, a record everything, maybe put a shadow on the fact that we had also a kind of record reduction of SG&A. But it's not by chance. I would say that, as Christophe said, there are several factors to that. And one of the factors is that we are actively working on our SG&As across the world and, for example, especially in Europe, we are really permanently reengineering, rethinking our organization, restructuring, optimizing. And we don't publicize this. We are not the type of company that is proud to make big reengineering or restructuring. But we're permanently doing it, that's what we used to call in the past, the permanent reengineering - the permanent restructuring of L'Oréal. L'Oréal is not a company that keep the things the way they are. And every 5 or 10 years, there's a massive restructuring. We do it just year after year, after year, after year, and all the heads of the business that are here can testify that they really do their job to optimize permanently the organization. And so that's really the - what is the source of this nice reduction of SG&A which is pretty impressive. Growing pains? No, honestly, I don't see any growing pains. No, it's not the fact that we are nicely growing, it's not creating special plans. Maybe it's - I wouldn't say that the life of our President of Operations, Barbara Lavernos, in the front row is an easy one every day because she has to cope with growth. And you're right, coping with such a growth is something not easy, but it's not a pain. And I don't think that you should be afraid of any future threat on anything. And on plastic, I would say that your perspective is interesting. It's very different from ours. Our perspective on plastic is that we just want to be exemplary on plastics as we have been on carbon, forest to water, everything, and plastic is the new priority. Doesn't mean, again, that we will be less sharp on carbon and impact and water and forest, but even, but we will be very sharp on plastic. And we have taken commitments. And when we take commitments, we deliver them. We have taken commitment, commitment that maybe Alexis, because you, you have a few plastics in your organization, you can remind us the commitment that you have taken for your division for 2025.

Alexis Perakis-Valat: Yes, for our division, we've sort of grew commitments. But we are, obviously, a big unit maker in this company, so we've taken some bold commitments. One of the examples is what we've done in haircare because haircare at the end is our biggest source of plastic consumption by far. And we've committed that 100% of all our haircare bottles everywhere in the world will be made out of recycled plastic, and we're starting already in 2020. In 2020 in Europe, all our haircare bottles on all our brands in all Western European countries will be made of recycled plastic. And already this year, we're going to save 18,000 tonnes of virgin plastic, thanks to this commitment.

Jean-Paul Agon: And globally, at the group's level, our commitment, as you've read, is that by 2025, 100% of our plastic will be either - plastic packaging will be either refillable, reusable, recyclable or compostable. So we are very determined, and we will do it. We will do it. And your perspective on this was, will be more cost? No. We'll find a way. I just want to remind you that when we committed to sharing with you it all in 2013, we commit to these very ambitious commitments, we just decided to do it because we thought we had to do it. And by the way, you've seen the nice improvement of profitability that we had since 2013. So we'll find a way without impacting the profitability of the company and your other worry was...

Richard Taylor: [Indiscernible].

Jean-Paul Agon: Our competitive advantage. We don't do it for competitive advantage. We do it because we think that we have to do it. If it happens also to be a competitive advantage, so be it. But it's not the number one reason for which we do it. We do it because we want to be exemplary. We are the number one beauty company in the world. We think it's our duty to be exemplary in terms of contribution to the beauty of the planet, protection of the beauty of the planet. And so everything we can do, we will do and invite you in 3 months, on the 20th of April, for the communication of the new [indiscernible] commitments that will be extremely ambitious. So you won't be disappointed. But it would be no future pains, don't worry. Yes, just behind. And then after that, I will take a question online.

Chris Pitcher: Chris Pitcher from Redburn. The last 10 years, you've invested significantly in LED digital quite convincingly, and that seems to be evolving into wanting to lead beauty tech. To the uninitiated, does the investment in digital give you the internal resources to invest and lead in beauty tech? Or do you mean to invest both in terms of headcount and through M&A? And should we expect more M&A along the lines of ModiFace and so forth rather than necessarily brand acquisitions? And does it mean - as an addendum, I'm sorry, does this change the competitor set at all in beauty tech?

Jean-Paul Agon: Yes, yes. This changed a lot the competitive advantage, the competitive set. First, the acquisition of Beauty of ModiFace was clearly not an acquisition like we used to do for brands or businesses, et cetera. It's not an additional business. It's an additional capacity to grow our business. And for us, ModiFace is more like an R&I, and I have to say that I'm very happy, and I thank Lubomira Rochet for having this idea, which was great - to buy ModiFace because thanks to ModiFace, we are definitely the best player in the world in terms of virtual reality, augmented reality, and it helps tremendously the sales on e-commerce. One of the reasons I wouldn't say that ModiFace is responsible for the fantastic over-performing on e-commerce, as you saw, we grew at plus 55% on a market that was 25%. But definitely, it contributed to this. So in terms of competitive advantage, it's huge. So that's number one. Number two, the next step for our transformation is what we call the Beauty Tech, which is the combination of the digital-first company, but also intelligent company first, too, which means the transformation of the company, in terms of cloud data, in artificial intelligence, et cetera. And we think that this is a combination of the two, being the top company in digital and being the top company in terms of IT, artificial intelligence, data circulation, et cetera, that will make us, by definition, stronger in the industry. So this is what we want to do. And like for the other things, we'll do it without impacting our cost. This is the direction that we are taking. And we are pretty confident on our capacity to deliver it. Okay. So there was a question for online. Maybe, Christophe, you can summarize it.

Christophe Babule: There are a couple of questions coming from Javier Escalante and Alan Erskine from Crédit Suisse. Both are related to the investment of our marketing investments. They noticed, of course, that the high-growth is supported by also much bigger investment. And there are a couple of questions asking about is it due to mix effect? Or is it because the cost of getting for additional growth is higher and how much this investment is ahead of the future growth.

Jean-Paul Agon: Good. It's a good question. I like this question. So for those of you who know us, and I know that Javier knows us, so he probably knows the answer already. Clearly, the increase in A&P was not something that we had do, but it's something that we chose to do. And we chose to do it because we had a great year in terms of gross margin. We had a great year in terms of reduction of our SG&A and after delivering the right improvement of profitability, we thought that the best way to - the best investment that we could do was to invest on our brands, our A&Ps in order to strengthen our position and to fuel the machine in order to prepare for accelerated growth. And again, for those of you who know us, you know that's what we do permanently. So that's answer number one. Answer number two, no, the cost of growth is not higher than before. I would even say that I wouldn't say that it's cheaper than before. But every - and maybe I will ask also Nicolas to comment on this, but the new marketing model based, for example, on data-driven precision advertising is more productive than the type of media that we had in the past. So I would say that all in all, it's probably even more cost-effective than before in terms of marketing model.

Nicolas Hieronimus: Totally true. We have - I mean, the ROI of our A&Ps is being measured with lots of attention, and it's true that today, thanks to digital, thanks to services, we can generate sales in a much more efficient way than before because we are talking particularly, specifically to the consumer we want to target and that's working. We also, in our investment strategy in A&P, we invest also. We have, as you saw, new brands in our portfolio. They are the big billionaire brands of tomorrow, and we deliberately choose to invest also to kickstart these brands and take them to the right size. So that's also part of the investment strategy.

Jean-Paul Agon: This was intentional. It's not something that happened by chance. Jim? Yes, please.

Namita Samtani: Namita Samtani, Bank of America. My first question is you mentioned the Consumer Products division was the only division not to grow faster than the market in 2019. Do you believe the gap between L'Oréal and the market will disappear or at least narrow going into 2020? And secondly, just going back to the A&P investment spend of more than €1 billion in 2019, how do you exactly keep track and measure the returns you're getting on these investments?

Jean-Paul Agon: All right. So CPD, I think, Alexis, you're pretty well positioned to answer.

Alexis Perakis-Valat: Of course, we are. Of course, we're determined to beat the market in 2020. The first thing I would answer is that in the Q4, we grew faster than the market, which is an encouraging sign that our strategy is working. The second thing is that our pain points are pretty clearly identified because it's the U.S. and Brazil. And in both countries, we've got very clear plans in place and some pretty encouraging early signals, especially in Brazil and also in the U.S. on the skincare market, as I told you. So we are absolutely determined to beat the worldwide mass market in 2020. And this last Q4 is encouraging for us and our teams.

Jean-Paul Agon: All right. But anyway, the duty of every division at L'Oréal, the duty of every division, every country, every brand, everyone is to beat the market. So don't worry, everyone around the world knows that the number one priority is to put again - to make the Consumer division great again and gain market share everywhere in the world.

Cyril Chapuy: Yes, on the tracking of the A&P ROI, first of all, to bounce back on what Jean-Paul just said, it's really a country-by-country and division-by-division strategy because, obviously, the business models are totally different, whether you're talking about PPD or L’Oréal Luxe. So each country is really keeping track of it. And there are several ways with which we do it. First of all, we have internalized and developed in relates to digital a full cockpit, where we can really measure the impact of every post, of every influencer, or every campaign that we put on there. And also, we work with some dedicated companies, great partners, which allow us to really measure the impact and almost predict the impacts of our different choices between digital media, promotions, regular advertising. And so we have a pretty good understanding of it, each division can give pretty, pretty accurate recommendation to the countries. But the next step, and that's part of the beauty tech endeavor is precisely to have all of this automatized inside L'Oréal, and that will be a great and a very exciting competitive advantage for us to be able to monitor fully and very closely our A&Ps.

Jean-Paul Agon: Okay. Other question? Yes, on this side this time.

Marion Boucheron: Marion Boucheron of MainFirst. Two questions, please. The first one on Asia. Do you have a rough idea what e-commerce this year allowed you to reach in like new consumers in the market? And then would you give us some color on the evolution of category penetration maybe in China? And then you were mentioning Stylenanda as a very successful brand this year. [indiscernible] makeup in China started to do with luxury.

Jean-Paul Agon: Sorry, I didn't understand.

Marion Boucheron: The development of makeup in China is - I mean, it's still a small category. It started with luxury. With Stylenanda, do you think you're able to democratize to make a boom there? Or I mean, is it new consumers that can engage in the category? And then the second point is U.S.A.

Jean-Paul Agon: That's not the second point, it's the fourth point.

Marion Boucheron: Sorry. What...

Jean-Paul Agon: It's okay, it's okay. Go for it.

Marion Boucheron: But in the U.S., on e-commerce, what's the way of e-commerce in the U.S.A.? And what can you do to improve on that part? I think at the Q3 results, you told us you were lagging a bit so...

Jean-Paul Agon: Okay. So you have many questions. The first one was how does e-commerce help us in Asia to reach new consumers penetration? Well, I don't have the precise figures for every country. I can just give you a very simple example is India. India, for L'Oréal, has always been pretty tough because as we don't have like some of our competitors, some shops are very basic products that can be - that should be distributed everywhere to tens of millions of little stores. Distribution for us in India was always a pain point, always a difficulty. We couldn't go as deep as some of our competitors could. E-commerce is changing everything. Now with e-commerce in India, any Indian lady, young lady, in any part of the country, any - even village can order online. The Kajal mascara of Maybelline, and it will be delivered to her. So for us, it's a fantastic revolution. It changed completely the paradigm of deep distribution that was always a limitation to our business, and so this is true for India. This is - this was true also for China, by the way. This is true for Philippines. This is true for Indonesia. This is true everywhere. And this will really change for us the nature of the game. Second question, Stylenanda. Maybe I don't totally agree when you say that makeup started with luxury because I remember that when I start - when I was in charge of Asia 20 years ago, we launched Maybelline, and Maybelline is really, I would say, the first brand that really democratized makeup in China. But where you're right is that the boom that we have seen these past 2, 3 years has been more on the luxury side with amazing results for our brands like Armani, Yves Saint Laurent, Lancôme, Shu Uemura in China. But Stylenanda is a fantastic bet. It has a very good start, and I will ask Alexis to say why.

Alexis Perakis-Valat: Yes. No, what's interesting also in makeup, to look at the market by price but also by type of beauty, a bit by beauty archetype. And we have a very interesting portfolio to that extent in China because we have, as Jean-Paul told you, the American brand, Maybelline, which really started makeup in China and which has a lot of opportunities to grow precisely also thanks to e-commerce because e-commerce is also an accelerator for Maybelline. So that's the American beauty archetype. We have L’Oréal Paris, which is the French maker brand, and we were missing an Asian makeup brand, and that's really the reason that pushed us to acquire Stylenanda is that for young Chinese women today, the Asian/Korean beauty archetype is a very important archetype, and that's why also Stylenanda is so successful. And obviously, in terms of a distribution channel, it was spot on from the inception because it's a digital-first brand that started on digital with just one very experiential store to create the excitement and the experience. But what is interesting is the portfolio that we have with one Asian brand, one French brand and one American brand with different price levels.

Jean-Paul Agon: Okay. And your other question was about e-commerce in the U.S. E-commerce, maybe I can ask every division to tell you how they perform on e-commerce in the U.S. in their respective business. Cyril?

Cyril Chapuy: So for L’Oréal Luxe, as I mentioned earlier, e-commerce is 22% of our sales in the U.S., we have very strong e-commerce D2C with our brand Kiehl’s, which is - which has reached a retail sales level, which is higher than €100 million in e-commerce that we see in the U.S. for Kiehl’s. It's a very powerful brand in D2C. We still have some opportunities in some of our brands in terms of D2C commerce in the U.S., and we are actively working on that. So overall, my objective is to reach in 2020 at least 25% of my sales in e-comm in the U.S.

Jean-Paul Agon: Which would be pretty strong.

Cyril Chapuy: Which would be.

Jean-Paul Agon: Nathalie, a few words maybe from you.

Nathalie Roos: Yes. So for us, obviously, e-commerce is smaller because the large part of our business is about services. But still, it's a very good source of growth in the U.S. as well, both in D2C. And to mention our D2C website, we have Kérastase and the D2C is contributing very nicely to the development on the bond in the U.S., but we are also working with some selected partners. For instance, I've mentioned in my presentation that we are working now with Sephora with the brand Kérastase. We have just a couple of stores where the execution is perfect, and we have the perfect execution of Kérastase brand in their website, sephora.com. And on the website, for instance, we create a mechanism to drive consumers to salons, like, for instance, having salon locator. On top of our e-commerce to consumers, we have developed our B2B e-commerce, which is, of course, a great tool to reach independent stylists in the U.S. market.

Jean-Paul Agon: Great. Brigitte? You're very good in e-commerce in the States. Yes, she is.

Brigitte Liberman: Yes. Yes, we are. E-commerce represents around 23% of our business. And what is quite interesting is that it's balanced between our D2C website, especially on SkinCeuticals, which is quite high, but also a pure player like Amazon, CeraVe is within the top brand in terms of skincare on Amazon. And also, we are working with - we're in a partnership with specific e-retailer, more health-focused or derm-focused. So it's quite balanced, and it's still a growth engine for this year on all our brands.

Jean-Paul Agon: Thank you. And CPD?

Alexis Perakis-Valat: So we're small in e-commerce in the U.S., but we're accelerating. There, for us, e-commerce is mainly two realities in the U.S. First, Amazon, with which we have a strong partnership, both in the U.S. and at the global level, which is accelerating pretty nicely. And then the second big group of partners in e-commerce is the e-retailers. And there, we're working a lot with our mass and drug e-retailers to show them that there is a great opportunity to develop beauty online. We're working with the Walmart.coms of this world to develop beauty on their platforms and to really play our role as category leader also online with them to grow e-commerce because it's one of the key opportunities of our team in the U.S. is to accelerate e-commerce, and it seems to be happening quarter after quarter.

Jean-Paul Agon: Thank you. So there was another question from - yes, please? Maybe it will be one of the last questions.

Iain Simpson: It's Iain Simpson from Barclays. So just wondered if you could tell us how big Travel Retail is for you now. It's clearly growing very impressively. But just what proportion of your overall business is it? And then looking at that very impressive growth in China in the fourth quarter, was there any benefit from buying ahead of Chinese New Year within that number because I think Chinese New Year is a little bit earlier this year than it was last year. And then more generally, and going back to Europe, you've had a variety of recent launches and acquisitions in the sort of natural hair care space, Logona, Garnier BiO, La Provençale, but how are they going? Do you have aspirations to do more in that space? How do you think about it?

Jean-Paul Agon: All right. So maybe, Alexis, again on these all-natural inspired brands, a lot are in your portfolio.

Alexis Perakis-Valat: Yes, we're very convinced that it's the right way to go. But first, just to put into perspective, the certified organic market worldwide is still a small part of the worldwide beauty market, depending on the countries between 2% and 4%. Yet, we believe that it has potential for the future. And that's why we did a number of things. We launched Garnier BiO, we launched La Provençale Bio, and we acquired Logona. And we're very - and we're 1 year into that, and we're pretty happy with the results. If you take a country like France, for example, which is maybe one of the countries where the share of organic is the biggest, we've actually doubled our market share on the total organic in this small fraction of the market. We've doubled our market share, thanks to all these initiatives. We also did initiatives on Australia on some specific French brands. So we're pretty happy about the results. Garnier BiO and La Provençale Bio are developing well. We're going to gradually expand La Provençale Bio in some Southern European countries. And just as a symbol, there is - there are some prices in our industry, which are the prices Marie Claire - and we actually got Marie Claire price both on Garnier BiO and La Provençale Bio, which is pretty rare because normally, they award these prices mostly to luxury brands.

Jean-Paul Agon: Good. So we are really moving forward in this category. So Travel Retail, you asked the question. It represents something like 9% globally of our sales worldwide, and you had a question about pre-sales for Chinese New Year. Nicolas?

Nicolas Hieronimus: Yes, overall, it's true that Chinese New Year hit sooner this year. There was a little bit of anticipation and of impact of this number in the Travel Retail numbers because you have time to reach all the customers, very little in the Chinese numbers themselves, the local market.

Jean-Paul Agon: All right. So we have one minute, if there is a last question, a nice one, please. The last question has to be a nice one. So I count on you, please, Ivan [ph]? Can you give him the mic? Thank you.

Unidentified Analyst: I have two questions. Last one will be nice, but first one is on your brand portfolio. In the last 12 years, you have acquired a lot of brands, some of them are struggling. You mentioned the position are sold back to 2 of them and the majority of your growth last year was driven by big brands that were already there 12 years ago. So do you want to keep the strategy of small acquisition? And can we expect other sales as the one you made two years ago The Body Shop and this week with Roger&Gallet?

Jean-Paul Agon: Was that the nice question or the next one?

Unidentified Analyst: The other one - you are struggling on two topics. One is a mass market and the other one is plastic.

Jean-Paul Agon: Plastics?

Unidentified Analyst: Plastics, yes.

Jean-Paul Agon: We are struggling on plastic? I don't understand.

Unidentified Analyst: I mean you are - you have a plan to reduce...

Jean-Paul Agon: Yes, of course, like everyone.

Unidentified Analyst: Yes. My question is, is it good to keep selling mass market shampoo? Is it strategic in your activities since shampoo is one of the slowest growing category of your products?

Jean-Paul Agon: Okay. So I didn't recognize, really, the nice one. But anyway, we would finish with these anyway. So no, at the end of acquisition - when you make an acquisition, you take a risk, you take a bet. And many of the bets that we have taken have been extremely successful. And also sometimes, one successful bet is worth 10 others. So the bet we took, even recently with CeraVe is a fantastic bet. It's going to become, I think, one of the biggest brand of L'Oréal worldwide. The bet that we took on Yves Saint Laurent 12 years ago, because you talk about 12 years, was a fantastic bet. Not only we tripled the sales, we multiplied by 10 the profitability or more. And also, it changed completely the profile of the Luxury division. Like CeraVe, by the way, will change probably the profile of the Active Cosmetics division, giving it a size that will change everything. So honestly, and also at the same time, we are pretty pragmatic and honest and humble. And when we see that something that we acquire is difficult or doesn't work as well as we want, we dispose it. And I just want also to remind you my dear, Ivan [ph], that Roger&Gallet was not really a brand that we acquired. It was in the basket [indiscernible]. And many of the other brands that we had to buy with Yves Saint Laurent at that time, like [indiscernible] Stella McCartney and others, we stopped them. Zegna, we stopped them. So we tried a bit more with Roger&Gallet but for different reasons. Again, we put our best efforts. But at one moment, it's better to say, okay, no, this brand will be better off in other ends. And for us, it will be also better because we would be able to concentrate our time, our energy, our talents, our resources on brand that we can grow more than that. And so your other nice question was on the shampoos. Of course, we want to stay in the shampoo market. We are the number one player in haircare in Western Europe. We have a business of haircare around the world. We have very strong laboratories on hair care. We have probably also there the most powerful research on hair and haircare. So absolutely, and we will find some alternatives to plastic for hair care, or maybe some - I don't know, some solid shampoos. I will give you one so that you can try and tell me.

Jean-Paul Agon: Okay. So thank you very much, and we invite you now for what Jean-Regis called a light cocktail that will be served on the first floor. Thank you very much. Bye, bye.