A promising market

LVMH - Louis Vuitton Moët Hennessy - the world’s leading manufacturer and retailer of luxury products, has reached an agreement to acquire a 70%, controlling stake in Sack’s, the leading online retailer of fragrances, cosmetics and toiletries and one of the leading company in the whole specialty beauty distribution sector in Brazil.

The acquisition of Sack’s will mark Sephora’s entry into the Brazilian perfumes and cosmetics market, one of the largest and fastest-growing beauty markets worldwide. In 2009, while the world was still struggling with the consequences of the financial crisis, the Brazilian market grew by 16%, according to the ABIHPEC, the Brazilian Toiletry, Perfumery and Cosmetic Association, who also forecasts a double-digit growth for the next five years.

“Brazil and, to a larger extent, South America are very promising countries for luxury goods. LVMH has been present there since 1973 and holds a leadership position in prestige beauty as well as in other segments of the luxury market. The opportunity is formidable,” commented Antonio Belloni, Group Managing Director of LVMH.

A springboard for Sephora

Sack’s will serve a springboard to Sephora, the chain retailer of high-end cosmetics, which is owned by LVMH, to develop its local business, online and over time in stores. “Sephora, which is the leading online beauty retailer in the USA, will bring its experience, acquired in international markets and online beauty retailing, to help develop Sack’s business and increase its penetration among Brazilian beauty shoppers,” says LVMH.

Mail and online orders are important retail channels for cosmetics in a country such as Brazil. It is the preferred channel of leading Brazilian cosmetics makers, Natura or O Boticário.

Founded in 2000, Sack’s carries over 270 brands, including the most famous ones, and its client portfolio comprises more than 830,000 customers. Sack’s is one of the top-three most frequently accessed pureplay e-commerce sites in Brazil, with 4 million unique visitors each month.

Mr. Carlos André Montenegro, co-founder and Chief Executive Officer of Sack’s and his partners, Albatroz Participações and Mr. Marcelo Franco, will continue to hold a 30% stake in Sack’s. According to LVMH, the current management team, led by Mr. Montenegro, will remain in place and Sack’s will continue to be based in Rio de Janeiro.