L’OREAL ANTI-DIVERSION RESULTS & QUALITY KING LITIGATION UPDATE
Dear Salon Partner:
Our goal at L’Oreal is to provide you with outstanding salon products and education, coupled with best-in-class service. Core to our commitment is to lead the fight against diversion.
Recently you may have heard about communications to salons that mention L'Oreal's continuing lawsuit against Quality King (one of the country’s leading grey market wholesalers of salon products), regarding the unauthorized sale of ARTec and Matrix.
Here are the facts:
In 2006, a judge granted L'Oreal a preliminary injunction that banned Quality King from selling ARTec – a win for us at L’Oreal. That injunction remains in place today.
In November 2007, after three years in litigation, a different judge lifted a 1990 injunction that prohibited Quality King from selling Matrix. We are surprised by the ruling because we were simply asking that the court enforces its own order. We have already filed an appeal to reinstate the 1990 ban.
The good news is, that despite this one legal setback, our many other initiatives are showing results.
Diversion of L'Oreal brands declined dramatically in fourth quarter '07. Thanks to the implementation of our coding systems and our new distribution strategy (the acquisition of BAI, Maly’s and CBS) fourth quarter data shows double-digit declines in diversion – 16.2% across the L’Oreal Professional Products Division.
Q4 2007 vs. Q3 2007
Matrix: Diversion Down 16.1%
Redken: Diversion Down 17.6%
Pureology: Diversion Down 4.5%
These results speak for themselves.
We pledge to continue our fight to shut down those who divert salon professional products, and thank you for your continued partnership.