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L'OREAL FOR THE LONG TERM
Le Journal des Finances, a respected French financial newspaper, recently reported that L’Oréal was the highest performing share on the French stock market over a twenty-five year period.
How much would you have now if you had invested $1000 in L’Oréal in 1978? The answer is a whopping $86,500! Yes, L’Oréal stock is worth 86.5 times what is was 25 years ago and the Group tops the list of twenty companies with the best long-term performances on the Paris Stock Exchange. Compiled by the Paris-based weekly, Le Journal des Finances, the list also includes such well-known Gallic firms as Bouygues, Carrefour, LMVH, Danone, Air Liquide, Pernod-Ricard, Galeries Lafayette and Accor.
The Keys to Going the Distance
According to Le Journal des Finances, these companies have certain characteristics in common and there are a number of identifiable reasons why they have performed so well. Over the long-term, stock markets always favor companies that are able to increase profits on a steady basis. The journalists single L'Oréal as an international “case study” in this arena since the group has shown double-digit growth every year for the last 18 years.
Sticking to What They Know Best
Formulating a simple, practical long-term strategy and implementing it with determination is another key to sustained success. The authors note that companies that stick to doing what they know best are likely to come out on top and acquisitions must be made with caution. L'Oréal was singled out by the report for favoring internal growth over the buying of outside companies. As CEO Lindsay Owen Jones explains, “For the past five years, only 15% of our additional turnover have come from acquisitions.”
It’s All About the Products
So obvious that it’s sometimes neglected in the windfall of numbers and statistics, the importance of quality products is paramount to corporate longevity. And quality products result in a respected and recognized brand name. L'Oréal is cited by Le Journal des Finances as a prime example of brand recognition and as a prime example of a firm that sustains its reputation for quality by constantly innovating and renewing product lines. According to the authors, one way of determining whether a company is truly innovative is to examine their research and development budget, and they point out that L'Oréal devotes a remarkable 3% of its revenues to R&D.
Long-Term CEOs and Family Involvement
According to the journalist’s analysis, companies where the founding families maintain shares and have a hand in management tend to do well, as do companies where CEOs stay a long time. They recall that L’Oréal’s Lindsay Owen-Jones has headed up the Group for fifteen years. For them, that’s indeed long-term, and it reflects L'Oréal's long-term commitment to staying on top of the market.
Le Journal des Finances, a respected French financial newspaper, recently reported that L’Oréal was the highest performing share on the French stock market over a twenty-five year period.
How much would you have now if you had invested $1000 in L’Oréal in 1978? The answer is a whopping $86,500! Yes, L’Oréal stock is worth 86.5 times what is was 25 years ago and the Group tops the list of twenty companies with the best long-term performances on the Paris Stock Exchange. Compiled by the Paris-based weekly, Le Journal des Finances, the list also includes such well-known Gallic firms as Bouygues, Carrefour, LMVH, Danone, Air Liquide, Pernod-Ricard, Galeries Lafayette and Accor.
The Keys to Going the Distance
According to Le Journal des Finances, these companies have certain characteristics in common and there are a number of identifiable reasons why they have performed so well. Over the long-term, stock markets always favor companies that are able to increase profits on a steady basis. The journalists single L'Oréal as an international “case study” in this arena since the group has shown double-digit growth every year for the last 18 years.
Sticking to What They Know Best
Formulating a simple, practical long-term strategy and implementing it with determination is another key to sustained success. The authors note that companies that stick to doing what they know best are likely to come out on top and acquisitions must be made with caution. L'Oréal was singled out by the report for favoring internal growth over the buying of outside companies. As CEO Lindsay Owen Jones explains, “For the past five years, only 15% of our additional turnover have come from acquisitions.”
It’s All About the Products
So obvious that it’s sometimes neglected in the windfall of numbers and statistics, the importance of quality products is paramount to corporate longevity. And quality products result in a respected and recognized brand name. L'Oréal is cited by Le Journal des Finances as a prime example of brand recognition and as a prime example of a firm that sustains its reputation for quality by constantly innovating and renewing product lines. According to the authors, one way of determining whether a company is truly innovative is to examine their research and development budget, and they point out that L'Oréal devotes a remarkable 3% of its revenues to R&D.
Long-Term CEOs and Family Involvement
According to the journalist’s analysis, companies where the founding families maintain shares and have a hand in management tend to do well, as do companies where CEOs stay a long time. They recall that L’Oréal’s Lindsay Owen-Jones has headed up the Group for fifteen years. For them, that’s indeed long-term, and it reflects L'Oréal's long-term commitment to staying on top of the market.