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Grandmère is out and the 25-year old grandson is in… After years of a bitter family dispute, the octogenarian billionaire heiress, France’s richest woman and daughter of the founder of the L’Oréal Group (Euronext:OR) has stepped down off the board of L’Oréal and given her seat to her 25-year old grandson Jean-Victor Meyers. Last fall, Liliane Bettencourt was sadly proven to be suffering from Alzheimer’s and dementia and declared unfit to run her own affairs. Liliane’s family owns 31% of L’Oréal shares, while Nestlé food group owns a 30% stake. The $65 billion business is the world’s largest cosmetics company, owning Kiehl’s, Giorgio Armani cosmetics, Garnier, Lancôme and The Body Shop.
We can’t help but think the family feud has impacted L’Oréal’s strategic thinking… when you compare its performance with that of Estée Lauder (NYSE:EL). What with all the craziness over debt crises and threats of bankruptcies, few Europeans are thinking about upgrading their face cream. While half of L’Oréal’s revenues rely on the European market, Estée Lauder only relies on Europe for a third of its revenues. Pas une surprise then that Estée Lauder has returned 270% to its shareholders over the last three years; that’s nearly seven times more than what L’Oréal shareholders got. Certainly you’re worth it, but is L’Oréal?
Not hot? Despite the blaring club music and topless male models, Abercrombie & Fitch (NYSE:ANF) reported this week that its profits are down compared to last year. The CEO blamed the high cost of cotton, but we all know better. Jersey Shore cast members may have been offended when A&F publicly asked them to stop wearing their brand, but who’s laughing now, hmmm? Nevertheless, the company’s shares rose more than 12% even on the disappointing results. And we thought teenagers were fickle…
Procter & Gamble (NYSE:PG) is officially out of the food business… having already sold off Folgers coffee and Jif peanut butter. P&G’s last edible holding was Pringles potato chips, which it has agreed to sell to Kellogg Co. (NYSE:K) for $2.7 billion cash. This is no small bite: adding Pringles to its mix will nearly triple Kellogg’s snack portfolio. P&G will now focus solely on beauty products and personal care. About 1,700 P&G employees are moving to Kellogg’s…Special K anyone?
Finally, if you haven’t already spent half the day playing FarmVille, CityVille or the new CastleVille… you may have noticed that game developer Zynga released its first financial report as a public company. Analysts were expecting profits of 3 cents per share, but Zynga delivered 5. Nice! The company’s shares started trading last December at $10 each; this week they were trading over $14. The Facebook factor helped. In its IPO filing documents, the social network site revealed it has 845 million users…all of whom are potential Zynga game clients. Let the games begin…
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