Le Labo Six Month Buying Plan

Spring/Summer 2021 Six Month Buying Plan Estela Manotoc, Cameron Powell & Alyssa Smalley

“a playground for your nose” - Le Labo

CONTENTS Brand Profile..................p 3 Competitive Marketplace.......p 22 6 Month Buying Plan...........p 46

BRAND PROFILE

3

1. Brand Identity 2. Core Mission 3. Scope & Size 4. Distribution Channels 5. Social Media & Digital Marketing 6. Product Categories 7. Target Market 8. Core Competencies 9. COVID-19 Impact

4

BRAND IDENTITY

“ Le Labo is a sensory and experiential lifestyle brand, deeply rooted in the craft of slow perfumery, it offers hand-crafted and personalized fragrances, as well as ‘alternative’ and genuine experiences celebrating craftsmanship.”

5

HISTORY - “Born in Grasse, Raised in New York” - Founders : Edouard Roschi & Fabrice Penot - 1st perfume lab opened: February 2006 - Acquired by The Estee Lauder Group of Companies in 2014.

“We work with a community of craftswomen and craftsmen who contribute to and shape our world: the perfumer, the lab technician, the candle pourer, the rose harvester

CORE MISSION

We work to make the lives of people more beautiful by creating unique sensorial experiences, and our craft is deeply rooted in slow perfumery.

In our labs, every fragrance is freshly handblended and each label is personalized.

Each location is designed as a fragrance lab open to the public where we offer the possibility to smell and touch raw materials to awake the olfactory system.

The core of our collection is 18 unisex perfumes and 10 soy-based wax candles. We also offer genderless body formulas and a grooming line�

8

SCOPE & SIZE

Every boutique & corner is equipped with an “olfactionary”.

Customers can breathe in the various scents to develop their olfactory palette.

9

LOCATIONS - Available in 33 countries/regions

Taiwan, Singapore, Hong Kong, Malaysia, China, Japan, Korea, Kuwait, Thailand, Australia, Canada, Belgium, Denmark, France, Czech Republic, Germany, Ireland, Italy, Lithuania, Netherlands, New Zealand, Norway, Portugal, Russia, Serbia & Montenegro, Saudi Arabia, South Africa, Sweden, Switzerland, UK, United Arab Emirates

GEOGRAPHICAL MARKETS - Largest: North America (89 locations) - 2nd Largest: Europe (85 locations)

DISTRIBUTION CHANNELS AVAILABILITY - Le Labo Website - Nordstrom Website - 175 corners (at luxury department stores) - 66 boutiques

11

SOCIAL MEDIA & DIGITAL MARKETING

“Rose 31 is like a woman in love. Santal is like a woman in heat.”

- West 29th Street NYC

12

INSTAGRAM @lelabofragrance (490K followers) - Matches brand aesthetic - Moderate engagement (1 post every 2 to 4 days, occasional replies) - Lack of omni-channel experience (no product links)

- Highlights ingredients, processes and perfumers - Photos and videos - One IGTV

INSTAGRAM @overheardlelabo (68.9K followers) - Matches brand aesthetic - Customer stories - Customer reviews - Engaging and fun

FACEBOOK Le Labo Page (14K likes) - Only customer reviews - Brand information - Little to no engagement

PRODUCT CATEGORIES 1. Fine Fragrances 2. Body- Hair- Face 3. Grooming 4. Home 5. Sets

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TARGET MARKET MARKET SEGMENTATION - Niche - Luxury - Unisex

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“The future of perfumery is coming from someone more educated�

- Fabrice Pinot (co-founder)

DEMOGRAPHICS - Millenials & Gen Z - All genders - Above average earning capacity - Middle & upper class - Educated & cultured

“For people who trust their instincts�

- Fabrice Pinot (co-founder)

PSYCHOGRAPHICS - Prefers inspiring brands - Values transparency & sustianability - Thinkers, innovators, creatives - intuitive - Prefers customization

CORE COMPETENCIES

- Customization & personalization - Sustainable (recycable, cruelty free, natural, ethical) - Unisex - Luxury - Experiential 20

COVID-19 IMPACT

ON LE LABO - Nordstrom sale on fragrance - Delayed online delivery - All boutiques closed

ON LUXURY FRAGRANCE - Low to zero demand - High risk category - Turning to home category

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THE COMPETITIVE MARKETPLACE 22

1. Price Mapping 2. SWOT analysis 3. Lifestyle Trends 4. Tehcnology Trends 5. Beauty Trends 6. Product Category Opportunity

23

PRICE MAPPING

23

SWOT ANALYSIS ANNUAL SALES (USD) - Le Labo: $ 16.4M - Diptyque: $ 85M - Byredo: $60M - Jo Malone: $119M 25

LIFESTYLE TRENDS

- Wellness - Sustainability - Discount Mindset

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WELLNESS - Concern: basic hygiene - Upgrade: wellness basics - High-grade ingredients - Natural scents - Mental & emotional wellbeing - Aromatherapy

SUSTAINABILITY - Plastic free packaging - Reusable & refillable packaging - Responsible & ethical brand practice - Heightened focus on values around sustainability due to COVID-19

DISCOUNT MINDSET - Anti-consumerism - Frugality - Turn to off-price channels - Brand opportunity: Entry level prices Travel sets ($45) Minis ($10) Bodycare ($17-$45)

TECHNOLOGY TRENDS

- Shopping from Home - Online Consultations

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SHOPPING FROM HOME - Stronger e-commerce channels - Livestreaming - Spending via social channels *25% increase for EU and US consumers

ONLINE CONSULTATIONS - Online engagement: sales associates - Increase in sampling - Virtual reality tools

BEAUTY TRENDS

- Handcare is the New Selfcare - Gender Inclusivity - Minimalistic Packaging

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HAND CARE IS THE NEW SELF CARE - Long-term focus on hand care - Repairing and healing benefits - Seeking products with ceramides and - +1,400% interest in hand masks

GENDER INCLUSIVITY - The men’s beauty market is growing - Many brands are using male

influencers - Companies are sidestepping gender - Fragrance is shifting to unisex

MINIMALISTIC PACKAGING - Easy to understand packaging - Emphasis on the formula - People desire simplicity now more than ever - More sustainable

PRODUCT CATEGORY OPPORTUNITY BODYCARE - Hand soap & Body soap - Lotions & cremes - Shampoo & conditioner - Hair OIl & body oil 43

KEY PRODUCT: HAND SOAP

KEY PRODUCT: HAND LOTION

SIX MONTH BUYING PLAN

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1. Corporate Buying Plan 2. Store Buying Plans 3. Corporate Assortment Plan 4. Opportunity Statement

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CORPORATE BUYING PLAN KEY POINTS - Annual Net Sales of $16.4M: 35% for 6 months; bodycare as 15% of sales - Longer Months: March & May - Peak Sales Months: June & July

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Le Labo Bodycare Sp r i n g / Su m m e r 2 0 2 1 Plan Net Sales, Spring 2021

$

878.2

Inventory Turnover:

Est. Net Sales, Spring 2019

$

861.0

Planned Reductions, $:

2.0%

Plan % Last Year:

$

Average Stock, Retail:

473.0

1.8 $

43.91 5.00%

Reductions % Sales:

65%

Plan IMU %:

(000's)

Sp r i n g / Su m m e r 2 0 2 1 6 M o n t h Bu y i n g Pl a n February

March

April

May

June

July

Spring 2021

Net Sales

105.4

131.7

105.4

140.5

175.6

219.6

878.2

% Spring Sales

12%

15%

12%

16%

20%

25%

100%

Plan BOM Stock

432.1

461.1

442.6

477.8

526.9

570.8

2911.3

4.1

3.5

4.2

3.4

3.0

2.6

3.5

Plan EOM Stock

461.1

442.6

477.8

526.9

570.8

400.0

2879.2

Plan Reductions

7.2

7.2

7.2

7.2

7.2

7.9

43.9

16.40%

16.40%

16.40%

16.40%

16.40%

18.00%

100.00%

Purchases, Retail

141.6

120.5

147.7

196.9

226.8

56.6

890.0

Purchases, Cost

49.5

42.2

51.7

68.9

79.4

19.8

311.5

Stock / Sales Ratio

% Spring Reductions

STORE BUYING PLANS KEY POINTS - NYC Nolita: Flagship boutique with most sales Consumers: loyal locals & many tourists High Stock-Sales ratio - SF Pacific Heights Smaller boutique with average sales

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Le Labo NYC Nolita Sp r i n g / Su m m e r 2 0 2 1 Plan Net Sales, Spring 2021

$

179.4

Inventory Turnover:

Est. Net Sales, Spring 2019

$

175.9

Planned Reductions, $:

2.0%

Plan % Last Year:

$

Average Stock, Retail:

(000's)

CHE CK

$

183.1

30. 17 $

1.0 $

8.97 5.00%

Reductions % Sales:

65%

Plan IMU %:

23. 00 $

28. 38 $

46. 32 $

37. 49

Sp r i n g / Su m m e r 2 0 2 1 6 M o n t h Bu y i n g Pl a n February

March

April

May

June

July

Spring 2021

21.53

28.70

21.53

26.91

44.85

35.88

179.4

% Spring Sales

12%

16%

12%

15%

25%

20%

100%

Plan BOM Stock

150.69

166.48

172.22

185.67

215.27

208.10

1098.42

7.0

5.8

8.0

6.9

4.8

5.8

6.4

Plan EOM Stock

166.48

172.22

185.67

215.27

208.10

183.24

1130.97

Plan Reductions

1.47

1.47

1.47

1.47

1.47

1.61

8.97

16.40%

16.40%

16.40%

16.40%

16.40%

18.00%

100.00%

Purchases, Retail

38.78

35.91

36.45

57.98

39.14

12.63

220.91

Purchases, Cost

13.57

12.57

12.76

20.29

13.70

4.42

77.32

Net Sales

Stock / Sales Ratio

% Spring Reductions

Le Labo SF Pacific Heights Sp r i n g / Su m m e r 2 0 2 1 6 M o n t h Bu y i n g Pl a n $ $

Plan Net Sales, Spring 2021 Est. Net Sales, Spring 2019 Plan % Last Year:

$

Average Stock, Retail:

(000's)

CHE CK

$

46.9 46.0 2.0% 39.8

14. 24 $

Inventory Turnover:

$

Planned Reductions, $: Reductions % Sales: Plan IMU %:

12. 83 $

14. 71 $

1.2 2.35 5.00% 65%

16. 58 $

19. 63

Sp r i n g / Su m m e r 2 0 2 1 6 M o n t h Bu y i n g Pl a n February

March

April

May

June

July

Spring 2021

Net Sales

5.63

7.04

5.63

7.51

9.38

11.73

46.91

% Spring Sales

12%

15%

12%

16%

20%

25%

100%

Plan BOM Stock Stock / Sales Ratio

33.78 6.0

36.59 5.2

37.15 6.6

41.28 5.5

43.16 4.6

46.91 4.0

238.86 5.3

Plan EOM Stock

36.59

37.15

41.28

43.16

46.91

39.98

245.07

Plan Reductions

7.20

7.20

7.20

7.20

7.20

7.90

43.91

16.40%

16.40%

16.40%

16.40%

16.40%

18.00%

100.00%

Purchases, Retail

15.65

14.80

16.96

16.58

20.34

12.70

97.02

Purchases, Cost

5.48

5.18

5.94

5.80

7.12

4.44

33.96

% Spring Reductions

Corporate Assortment Plan

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PRODUCT CHARACTERISTICS - Product typology - Scent

S p rin g /S u m m e r 2 0 2 1 C o rp o ra te A s s o rtm e n t P la n $890.00

Budget (000s) Unit Cost

$30.00

Units Needed

29,667

Hinoki

Basil

Mandarin

Others

Totals

Lotion

3,441

3,441

1,291

430

8,603

Handsoap

1,305

1,305

490

163

3,263

Shampoo

1,305

1,305

490

163

3,263

Conditioner

1,305

1,305

490

163

3,263

Shower Gel

2,136

2,136

801

267

5,340

Other

2,373

2,373

890

297

5,933

11,867

11,867

4,450

1,483

29,667

Totals

We believe that this strategy is a realistic approach to Le Labo’s business plan and aims to capitalize on the market shift to wellness

OPPORTUNITY STATEMENT

and bodycare. At the same time, Le Labo’s body care products which are priced lower than competitor products, can also serve as entry level priced items that can bring in new loyal consumers. To further increase profit, Le Labo can take growing technology trends as opportunities to further connect with their consumers online through advertising, workshops and live consultations.

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“An entry into the backstage of perfume creation.”

- Eddie Roschi

About Us | Le Labo Fragrances. (n.d.). Retrieved April 7, 2020, from https://www.lelabofragrances.com/about-us.html Barney’s New York. (2013, July 1). Le Labo’s “Imperfect Twins”: Uncommon Scents for Uncommon Minds at Barneys New York [Video file]. YouTube. Retrieved from https://www.youtube.com/watch?v=1qdlhAEBGLM Burcham, C. (2019, February 13). Le Labo Santal 33: Fashion’s Favourite Fragrance. Retrieved from https://www.whowhatwear.co.uk/ le-labo-santal-33 Business Wire. (2019, August 19). The Estée Lauder Companies Delivers Outstanding Fiscal Year 2019 Results. Retrieved from https://www.businesswire.com/news/home/20190819005176/en/Est%C3%A9e-Lauder-Companies-Delivers-Outstanding-Fiscal-Year Capper, A. (2018, January 25). Cosmetic Packaging's New Simplicity. Retrieved from https://www.beautypackaging.com/contents/view_ online-exclusives/2018-01-25/cosmetic-packagings-new-simplicity/ Chernikoff, L. (2020, February 14). The Rise of Gender-Inclusive Beauty. Retrieved from https://www.businessoffashion.com/articles/professional/the-rise-of-non-binary-beauty Flora, L. (2020, April 6). Zoom emerges as a community platform for beauty brands. Retrieved from https://www.glossy.co/beauty/ zoom-emerges-as-a-community-platform-for-beauty-brands Haslett, S. (2020, March 30). Clever ways beauty brands are getting around COVID-19 - including virtual consults and at-home kits.

Retrieved from https://www.dailymail.co.uk/femail/article-8169753/Clever-ways-beauty-brands-getting-COVID-19-including-virtualconsults-home-kits.html Kilikita, H. (2020, March 16). Retrieved from https://www.wgsn.com/content/board_viewer/#/86509/page/1 Langridge, K. (n.d.). DIPTYQUE. Retrieved from http://www.twenty6magazine.com/issue-d/lifestyle/diptyque Latimer, A. (2020, April 14). Did COVID-19 Just Change Online Beauty Retail Forever? Retrieved from https://www.gcimagazine.com/marketstrends/channels/onlinetv/Did-COVID-19-Just-Change-Online-Beauty-Retail-Forever-569636311.html Lieber, C. (2020, March 19). The Fashion-Tech Tools Getting a Boost As Covid-19 Takes Hold. Retrieved from https://www.businessoffashion.com/articles/professional/the-fashion-tech-companies-getting-a-boost-as-covid-19-takes-hold McKinsey & Company. (2020). The State of Fashion 2020. Retrieved from http://cdn.businessoffashion.com/reports/The_State_of_Fashion_2020_Coronavirus_Update.pdf?int_source=article2&int_medium=download-cta&int_campaign=sof-cv19 Moore, C. (2019, October 24). 'Makeup no makeup' shifting cosmetics industry to skincare focus. Retrieved from https://www.foxbusiness.com/lifestyle/natural-beauty-trends-are-transforming-the-cosmetics-industry-by-saying-no-to-makeup-yes-to-skin PureWow. (2020, March 19). 6 Words: Le Labo is On Sale, Run! Retrieved April 8, 2020, from https://finance.yahoo.com/news/6-wordsle-labo-sale-185800486.html Street, C. (2018, September 20). Cult fragrance brand Byredo just opened a GIANT store in Soho. Retrieved from https://www.standard.co.uk/beauty/byredo-ben-gorham-london-soho-store-a3940311.html The Brander. (n.d.). Le Labo - Revolutionizing Perfume. Retrieved April 8, 2020, from https://www.thebrander.com/en/lifestyle/ le-labo Tribulant Software. (2019, September 30). Minimalist Packaging: Why It's The New Packaging Trend. Retrieved from https://tribulant.com/blog/general-news/minimalist-packaging-why-its-the-new-packaging-trend/ WatchMojoFashion. (2012, May 25). Le Labo Explains The Power of Scent [Video file]. YouTube. Retrieved from https://www.youtube. com/watch?v=iNeuOd4dprY PureWow. (2020, March 19). 6 Words: Le Labo is On Sale, Run! Retrieved April 8, 2020, from https://finance.yahoo.com/news/6-wordsle-labo-sale-185800486.html

REFERENCES

Spring/ Summer 2021 Six Month Buying Plan Estela Manotoc, Cameron Powell & Alyssa Smalley FASM 245 | Demesko | Spring Q 2020