L'Oréal: Stock Story

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Tell us about the company

Katie Muir: It all started with French chemist, Eugène Schueller who founded a small hair dye company that grew into the largest beauty company in the world, L'oréal.

The company has travelled far from its origins, and today has a unique footprint operating in 150 countries, across all beauty categories and distribution channels.

Its portfolio of around 40 brands spans every price point—from consumer staples to luxury—and its commitment to innovation and sustainability (with more than 4000 researchers around the world) keeps it ahead of consumer trends and demands.

What makes the stock special?

There are many reasons why we like L’Oréal as a holding. The company has been part of Baillie Gifford client portfolios for more than 30 years. Over the decades of partnership, we can see three key features that have been critical to L’Oréal’s success.

First, is an exceptional corporate culture of experimentation. “Seize whatever is new” is a mantra preached by L’Oréal’s management since the 1960s and has translated to pivotal moves into China and e-commerce.

Second, is its operating structure. Centrally coordinated moves like their 2010 push into digital are backed up by decentralised product and marketing teams who are empowered to make local decisions.

And third, is its family ownership structure. Four generations of Bettencourt-Meyers have influenced L’Oréal’s unique culture while offering valuable shareholder stability.

What could the future hold?

The global beauty market is estimated to be worth $300bn and is expected to grow around 4 per cent each year. This growth is underpinned by the trends of urbanisation, demographics and a growing middle class.

As the undisputed leader in this highly fragmented market, we believe L’Oréal will continue to take market share by dominating ecommerce, by making strategic acquisitions and tapping into emerging markets, where a billion potential new customers await by 2030.

We feel that the longevity of the growth opportunity, combined with an exceptional culture and attractive financial characteristics is why L’Oréal remains an attractive investment opportunity.

Risk factors

The Funds are distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited. All information is sourced from Baillie Gifford & Co unless otherwise stated.

As with all mutual funds, the value of an investment in the Fund could decline, so you could lose money. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. These risks are even greater when investing in emerging markets. Security prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. Currency risk includes the risk that the foreign currencies in which a Fund’s investments are traded, in which a Fund receives income, or in which a Fund has taken a position, will decline in value relative to the U.S. dollar. Hedging against a decline in the value of currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. In addition, hedging a foreign currency can have a negative effect on performance if the U.S. dollar declines in value relative to that currency, or if the currency hedging is otherwise ineffective.

For more information about these and other risks of an investment in the Funds, see "Principal Investment Risks" and "Additional Investment Strategies" in the prospectus. There can be no assurance that the Funds will achieve their investment objectives.

This communication was produced and approved in April 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.

As at April, 2025, Baillie Gifford held L'Oréal. A full list of holdings is available on request and is subject to change.