Nocibé SA

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Nocibé SA

2 rue de Ticléni
59493 Villeneuve d’Ascq
France
Telephone: +33 3 20 71 49 49
Fax: +33 3 20 7149 50
Website: http://www.Nocibe.com

Private Company
Incorporated: 1924 as Vercamer SA
Employees: 2,000
Sales: EUR 323 million ($300 million) (2001 est.)
NAIC: 446120 Cosmetics, Beauty Supplies, and Perfume Stores

Nocibé SA is the third largest chain of selective perfume stores in France, trailing only Marionnaud and Sephora. The company operates more than 300 stores under the Nocibé and Process Blue names, which together combine to represent annual sales of more than EUR 323 million. Nocibé’s stores offer, in addition to a selected range of name-brand perfumes and beauty products, an emphasis on client counseling as well as spaces for individual beauty care. The company also has been testing the sales of lingerie in a small number of stores. Nocibé stores typically provide 150 to 300 square meters of selling space; larger stores include personal care “corners” and tanning booths. Perfumes and cosmetics retain the largest share of the company’s sales, at some 60 percent, and beauty care services add 20 percent to Nocibé’s sales. Since the late 1990s, the company has been one of the fastest-growing in the sector, multiplying both the number of stores in its network and its revenues by more than ten since 1996. Nocibé is led by founder Daniel Vercamer and CEO Xavier Dura. After selling the company to The Netherlands’ Kruidvat in 1998, Vercamer has regained a stake in the company, leading a management buyout in early 2003.

Transforming the French Retail Perfume Sector in the 1980s

Daniel Vercamer inherited a business wholesaling cosmetics and other beauty products in 1984. Founded by Vercamer’s grandfather in 1924, the business, Vercamer SA, had remained modest-sized and focused mostly on its base in Lille, in the north of France. The younger Vercamer, then in his mid-30s, maintained the wholesale operation, while making plans to launch the family company into the retail sector. Vercamer chose to stick close to the company’s core cosmetics product line, while extending that range to include sales of perfumes as well. The company opened its first perfume store, dubbed Nocibé, in 1984. At the time, the company counted just 15 employees.

From the start, Nocibé emphasized a commitment to customer service, adopting as its slogan: “A perfume shop for every woman.” Targeting the upscale segment of the perfume market, Nocibé presented a selection of branded perfumes, while providing not only individual counseling but also becoming one of the first to introduce personal beauty care services. Among the company’s other innovations was its insistence on grouping its product not according to brand name, but by character types, including “sophisticated,” “trendy,” “natural,” and others.

The company soon began building a retail network, making it one of the industry’s pioneers. The French had long been the world’s leading purchasers of perfume, yet into the early 1990s the sector remained highly fragmented, with the vast majority of perfume sales achieved through independent retailers.

By 1990, Vercamer had opened eight perfume stores. In that year, the company decided to base its future on the retail sector, and shut down its dwindling wholesale operation. The company then changed its name to Nocibé SA.

In the early 1990s, Nocibé stepped up the expansion of its retail network, reaching 28 stores by the end of 1996. The company, which remained focused on the northern region of France, saw its sales rise from just FFr 96 million (approximately EUR 14 million) to more than FFr 170 million in 1996. To finance its growth, the company turned to outside investors, selling a 14 percent stake in the company to investment vehicle Avenir Enterprises in 1994.

Nocibé quickly became a major player in the retail perfume sector, claiming the number four spot by mid-decade. The perfume market in France was itself undergoing a vast transformation in the 1990s. Sales in the sector had doubled since the mid-1980s, while at the same time the sector was undergoing a massive consolidation. By the mid-1990s, the market had shifted firmly away from the independent retailer to a smaller number of large retail networks.

Despite its rise, Nocibé remained too focused on the northern region. Although it could claim as high as a 15 percent market share in the region around Lille, the company’s share of the national market was just 1 percent. In the mid-1990s, the company began seeking expansion beyond its home territory, targeting markets with a population of at least 50,000. By 1997, the company had opened stores in Tours, Meaux, Rouen, and Beauvais.

Yet Nocibé faced stiffening competition for a share of the national market, particularly with the impressive growth of a new rival, Marionnaud, which, through a steady series of acquisitions, had quickly captured a leading share in the national market, and later grew into a European leader in the sector. To step up its own growth, Nocibé surprised the market by becoming the first in the sector to launch a public offering.

Public Perfume Pioneer in the Late 1990s

Nocibé joined the Paris Stock Exchange’s secondary market in March 1997. The successful offering, which reduced the Vercamer family’s stake in the company to just 75 percent, and also allowed Avenir Enterprises to cash out on its holding, gave the company the capital to begin its expansion plan. That plan, however, remained relatively modest, calling for the company to grow to no more than 40 stores in the next two years.

Yet Nocibé quickly exceeded its ambitions. In May 1997, the company announced its acquisition of Beauty Shop, a chain of 12 stores operating primarily in the southwest of France, particularly in such markets as Bordeaux and Toulouse. Initially, the Beauty Shops maintained their names; by 1998, however, most of those stores had been converted to the increasingly successful Nocibé format.

By the end of 1997, Nocibé’s revenues had topped EUR 53 million. The company continued making individual store purchases as it rolled out a national network, bringing its total to 46 stores by the end of that year, a figure that grew to 55 stores in 1998. The company also was enjoying success on the stock market, as its share price had more than doubled since its introduction.

Nonetheless, Nocibé found itself falling far behind in the race to gain market share. The consolidation of the perfume sector had taken off in the late 1990s, and competition for market share became particularly intense following the acquisition by Sephora, backed by the LVMH luxury products group, of its chief rival Marie-Jeanne Godard. Marionnaud, too, had continued its strong expansion, and now battled Sephora for the industry top spot. At the same time, a number of France’s large retail groups, including LeClerc, were planning to launch their own in-store perfume boutiques.

In October 1998, Nocibé, and especially the Vercamer family, announced that it had agreed to be acquired by The Netherlands’ Groenwoudt Groep (soon to change its name to Kruidvat), a multinational operator of supermarkets, drugstores, and liquor stores, as well as the Ici Paris XL chain of perfume stores active in Belgium and The Netherlands. The announcement caught the industry by surprise, particularly given Nocibé’s recent and successful public offering. Yet, as Vercamer explained to Investir: “The fight is going to become a lot harder than ever. It appears difficult to me to be able to maintain our rates of profitability and growth, as well as our rhythm of store renovation in the medium term, while at the same time satisfying the short term demands of our investors.”

Groenwoudt first acquired the Vercamer family’s holding company, Damave, which controlled nearly 60 percent of Nocibé’s stock and more than 72 percent of its voting rights, before completing a full-scale buyout of the company, de-listing it from the stock exchange. Vercamer remained in place at the head of the company, which now, in cooperation with the Ici Paris XL chain, boasted purchasing strength to rival the group’s main French competitors.

Acquiring a National Network for the New Century

Backed by Groenwoudt/Kruidvat, Nocibé began a new era of expansion that increased the number of stores in its network more than fivefold in just three years. While continuing to acquire individual stores, Nocibé began targeting acquisitions of other, regionally focused chains. In this way, the company was able to build out its network, from region to region, into a national competitor.

One of the first of the company’s new round of acquisitions came in early 1999, with the acquisition of the five-store chain of Rouge et Noir perfume boutiques, which were accompanied by four additional independent retailers. The company next turned to a larger acquisition target, that of Patchouli, itself a fast riser in the retail perfume market. Yet Nocibé lost out on that acquisition to Marionnaud.

Company Perspectives:

Nocibé is an accessible perfume store concept. Our business is selective distribution. Our vocation is making accessible a broad range of beauty products. Beauty is natural. Our business is simply to highlight this. Of course, we offer the lowest prices. And we reimburse the difference if our clients find the same product for less elsewhere. But our priority, and the daily concern of our store staff, is advice, reception and conviviality. Proximity and professionalism are values we strive for on a daily basis. Our goal is for our slogan “More Beautiful, My Life” to become a reality for each person who comes into our beauty shops. As you can see, at Nocibé, the customer is at the heart of our sales and beauty staff’s daily concerns.

Instead, Nocibé looked south, acquiring the eight-store chain of Odyssée perfume shops, giving Nocibé an entry into such southern French markets as Nice and Toulon. Whereas Nocibé converted most of its acquisitions, including the Rouge et Noir stores, to the Nocibé name soon after their purchase, it decided to keep the Odyssée name for the time being, building on its regional reputation.

By the end of 1999, Nocibé’s network had risen past 80 stores, giving it the number three spot in the French market. The company’s sales had continued to rise strongly as well, topping EUR 108 million. Encouraged by such growth, the company decided to erect a new headquarters building, in the Lille suburb of Villeneuve d’Ascq.

In 2000, Nocibé took an even bigger step forward in the race to dominate the French perfume market. In December 1999, the company announced its acquisition of the Empreinte chain, adding nine more stores to its network in a deal completed by February 2000. The Empreinte stores, which were converted to the Nocibé signage, strengthened Nocibé’s position in Paris and outlying areas.

Soon after completing the Empreinte purchase, Nocibé announced its acquisition of Baiser Sauvage, which operated 29 stores, chiefly in the Haute-Savoie region, but also with stores in Marseille. Baiser Sauvage also operated six stores featuring a novel concept, that of combining lingerie sales with its perfume and cosmetics selection. The addition of Baiser Sauvage not only expanded Nocibé’s network, giving it a strong position in a new region of the country, it also boosted its revenues by some 50 percent. If the company later replaced the Baiser Sauvage name with its own, it maintained the lingerie/perfume combination store concept, rolling it out to an additional five stores.

Meanwhile, Nocibé, encouraged by parent company Kruidvat’s ambitions to reach 200 stores in France by 2001, continued seeking new acquisition targets. Nocibé met that objective by March 2000, when it announced its purchase of Thelem SA, which operated under two store names, Process Blue and Les Térianes. The acquisition added an additional 24 stores under Nocibé’s control. More important, it added a network of some 80 franchised stores. Until then, Nocibé had avoided the franchise route, preferring to own the stores in its network. With the Thelem purchase, however, as CEO Xavier Dura told Cosmétique Hebdo, “We decided to learn a new business.” Now with 150 stores of its own, and nearly 250 in its entire network, Nocibé had firmly taken the number three position in the French market. For the time being, Nocibé continued to operate under five different store names while it pursued new store acquisitions. By mid-2001, the company had completed the purchases of another 26 stores, including a number of franchised stores. At that time, the company decided to consolidate its stores, converting the Odyssée and Baiser Sauvage stores to the Nocibé format, while folding the Les Térianes stores into the Process Blue chain.

Continuing in its drive to gain scale, Nocibé’s sales topped EUR 323 million in 2001. By mid-2002, the company’s network had expanded to 236 company-owned stores, complemented by 60 franchise stores, boosting the company to the number two position in France, in terms of number of stores. Then in September 2002, Nocibé and Daniel Vercamer were presented with a new opportunity, when the family controlling Kruidvat announced its intention to sell most of its assets, including the Ici Paris XL chain, to Hong Kong’s Hutchison Whampoa. Offered to reacquire the company he had founded, Vercamer turned to TCR Industrial Managers, based in Paris, for financial backing. TCR in turn recruited the United Kingdom’s Bridgepoint Capital, and the partners succeeded in raising the approximately EUR 250 million needed to complete the management buyout.

Once again a minority shareholder in his own business, Daniel Vercamer began making new plans for expanding the company. Yet further growth in France appeared difficult—the consolidation of the sector was viewed, in large part, as complete, with Marionnaud, Sephora, and Nocibé sharing some 70 percent of the French market. Instead, Nocibé began eyeing the international scene. With its new financial backing, the company could now look forward to repeating its successful growth formula in the new century.

Principal Divisions

Nocibé; Process Blue.

Key Dates:

1924:: Vercamer SA is founded as a wholesaler of cosmetics and other beauty products in Lille, France.
1984:: Under the leadership of Daniel Vercamer, grandson of the founder, the company launches a retail perfume shop in Lille.
1990:: With eight perfume stores under the Nocibé name, the company abandons wholesale sales in favor of its retail network.
1994:: Nocibé sells a 14 percent share to Avenir Enterprises as it builds up its network to 29 stores by 1996.
1997:: Nocibe goes public on the Paris stock exchange’s secondary market; the company acquires the Beauty Shop perfume stores in the southwest of France.
1998:: The Vercamer family sells its stake to The Netherlands’ Kruidvat, which then acquires 100 percent control of Nocibé.
1999:: Nocibé acquires the Rouge et Noir, Odyssée, and Empreinte stores.
2000:: Nocibé acquires the Baiser Sauvage chain of 29 stores and Thelem SA, which operated more than 110 Process Blue and Les Thérians company-owned and franchised stores.
2001:: Nocibé regroups its stores under Nocibé and Process Blue signage.
2002:: Daniel Vercamer leads a management buyout of Nocibé, backed by TCR Industrial Managers and Bridgepoint Capital and begins planning international expansion.

Principal Competitors

Marionnaud SA; Bath & Body Works, Inc.; BeautiControl Cosmetics, Inc.; The Body Shop International PLC; The Boots Company PLC; Buth-Na-Bodhaige Inc.; Duane Reade, Inc.; Sephora SA; The Estée Lauder Companies Inc.; Galeries Lafayette; Pinault-Printemps-Redoute S.A.