L'Oreal Reshuffle Sets Up CEO Succession Race as Stars Collide

  • Perakis-Valat and Hieronimus top candidates to replace Agon
  • Sales at consumer division accelerating while luxury slows

The race is on to succeed Jean-Paul Agon as CEO of L’Oreal SA.

When Alexis Perakis-Valat replaces Marc Menesguen in September as head of the company’s consumer-products division, it will ignite a potential two-man contest to replace the 59-year-old boss.

Jean-Paul Agon

Photographer: Bertrand Rindoff Petroff/Getty Images for Fondation L’oreal

In one corner, Perakis-Valat, who at 44 is taking over its largest unit after having presided over revenue growth in Asia that’s outstripped the pace of the overall business since 2013. In the other, Nicolas Hieronimus, 52, who has the highest profile role at L’Oreal after Agon and finance chief Christian Mulliez, overseeing divisions that include luxury -- its fastest-growing business -- and active cosmetics, its most profitable.

The promotion of Perakis-Valat, announced Monday, “may be a sign that Agon is thinking about his succession,” said Gael Colcombet, an analyst at Mainfirst Bank AG in London. “So far, Hieronimus was in the front seat to succeed him, but Perakis-Valat offers an alternative.”

The two men are the leading internal candidates to replace Agon as CEO if his mandate isn’t renewed in 2018, according to Colcombet. Monday’s reorganization is the most important since 2013, when Hieronimus was promoted to his current role and became the No. 1 contender for the top job, the analyst said.

L’Oreal, which holds its annual shareholder meeting Wednesday in Paris, declined to comment on its succession plans.

While Hieronimus has the edge in terms of divisional management, Perakis-Valat has proven himself in different geographies, Colcombet said. The timing may favor the latter as sales at the consumer division are accelerating while luxury, the second-largest unit, slows, Colcombet said.

Nicolas Hieronimus

Photographer: Jacques Demarthon/AFP via Getty Images

In his new role, Perakis-Valat will be tasked with building on the consumer unit’s strong start to the year as demand for makeup surges, particularly in North America. The division is winning market share in that region, Agon said Monday, unlike rival Unilever, which said April 14 it’s losing share in the North American skincare market.

Since Hieronimus took charge of the company’s so-called selective divisions, L’Oreal’s luxury, active cosmetics and professional products units’ combined sales have overtaken the consumer business, reaching nearly 12.5 billion euros in 2015. The luxury and active units’ margins have also widened. He was previously president of the luxury unit and managing director of professional products.

Menesguen is paying the price for two years of lackluster growth at the consumer-products unit, even as first-quarter sales rose at their fastest rate in three years. He will retire at the end of 2016 after 31 years at L’Oreal.

Agon took the helm in 2006, succeeding Lindsay Owen-Jones, and added the role of chairman in 2011. L’Oreal may repeat that process with Agon’s successor, Colcombet said.

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