With a valuation of 10 billion yuan, Aesop plans to go public in the United States independently?

Although the beauty "zero cruelty" has been controversial, Aesop still has a large number of loyal fans around the world, and has opened its shop in China. In order to speed up the pace of expansion, Natura Group tried to let Aesop go public in the United States independently, and has obtained more sufficient working capital.

A few days ago, Natura&Co (hereinafter referred to as Natura), a Brazilian beauty giant, said that it had started to study or split its Aesop Aesop brand, so that the brand could conduct an independent initial public offering (IPO) in the United States, with a view to providing funds for brand expansion.

Natura said that if an IPO or spin off is conducted, the luxury cosmetics brand will continue to be led by its current CEO, Michael O'Keeffe. After the final approval of the Board of Directors, the split decision needs to be approved at the shareholders' meeting, and most of the free floating shareholders will be present.

According to Natura, the strategy is consistent with "giving greater autonomy and responsibility to brands and business units". "In the past few months, IPO has been evaluated as an alternative to providing funds for the accelerated growth of Aesop. Natura&Co's management has been taking necessary measures to seek such an alternative."

In August this year, this high-quality luxury skin care brand from Australia officially expanded its business to the mainland market, with its first store in Shanghai. In today's global epidemic environment, opening physical stores has become a heavy asset, especially for Aesop, which is famous for its aesthetic design of stores. In order to seize the big cake of the Chinese market, it is a wise move for Aesop to use the power of the capital market.

Aesop Aesop started in 1987, when Dennis Paphitis, the founder, opened his Melbourne hair salon, Emis, and began to mix essential oil into hair products, developing trial samples for customers.

With the growing demand, in 1989, due to the voice similarity between "Emeris" and a more mature beauty brand, this new company was renamed Aesop.

For a brand with more than 230 stores and 90 department store counters, as well as about 2300 employees worldwide, Aesop's brand development and store expansion have always been "provocative" to other beauty brands in the market.

It uses black Helvetica and Optima Medium fonts as labels on amber bottles. More importantly, Aesop has insisted on not conducting animal tests on any of its products since the beginning. These products are 100% free of cruelty and purity.

Although the brand has never made large-scale advertising, nor deliberately invited stars or KOL to speak for it, thanks to the brand's insistence on products and value proposition, the brand's net sales revenue in 2018 reached 214 million pounds (about 1.74 billion yuan).

When most beauty brands pursue the idea of replacing agency with new products on a monthly basis, the development of each product line of Aesop is based on the actual needs of customers, and has always maintained a slow rate of new product introduction. This also gives Aesop the confidence that it will not participate in any promotion or discount around the world.

At present, Aesop's product line covers hair care, body care, hand care, skin care products, perfume and household products, with prices ranging from 60 to 1300 yuan.

Although Aesop does not have advertising boards or celebrity endorsements, it has a very beautiful shop.

Aesop has no two stores with the same style in the world. Each of its stores can integrate into the city and respond to the traditional context of local culture while maintaining its unique personality and brand style. The store space can be said to be the best advertisement of Aesop. Its store design around the world has not only attracted many consumers to clock in, but also become a design style that many people use for reference when decorating houses, especially bathrooms.

In 2010, Aesop sold its minority equity to an Australian private equity company to fund its development. At the same time, Aesop began to attract more attention. In 2012, Aesop sold 65% of its business equity to Natura, a Brazilian beauty company, for US $100 million, which once again helped the brand continue to develop with wider influence and more possibilities. The founder Paphitis still acts as a consultant.

From 2013 to last year, the brand's revenue grew by 20% annually on average, and its gross profit margin was about 90%. This data is far higher than other businesses of Natura.

For the market, when the stock is close to the lowest level in history, the brand independence plan is likely to unlock new value for Natura. At present, the valuation of the company by the capital market is less than R $20 billion (about 27.38 billion yuan).

Natura attempted to restore investor confidence through various reform programs after the stock plummeted 76% in the past 15 months. The share price rebounded 18% on Tuesday after the announcement.

Under the influence of the epidemic situation and the Russian Ukrainian war, Natura's ambition of global expansion is faced with severe reality checks and balances. Although the sales volume of Aesop is the main positive highlight, the growth rate of Avon, The Body Shop and other enterprises is lower than expected.

In the opinion of some analysts, Aesop alone is worth half of the group's market value. Citigroup analysts wrote in a note that a potential IPO or spin off would "reveal" the valuation of one of Natura's fastest growing business units. Analysts estimate that Aesop can have a premium of up to 20 times higher than the current (5.7 times) premium of Natura Group.

More importantly, the revenue of Aesop still increased by 5.7% during the epidemic period. Previously, the brand achieved double-digit growth in all markets dominated by North America and the Asia Pacific region.

Data shows that Aesop added 25 stores and 9 department store counters worldwide last year, including Barcelona, Hong Kong, Seoul, Taipei, Jeju Island, Edinburgh and New Jersey. Aesop has achieved an overall year-on-year growth of more than 25% in all regions where it operates, far exceeding expectations.

At present, it is launching new stores in existing markets such as Japan, South Korea, Canada and Australia, and has officially entered the offline market in China, opening two new stores in Shanghai.

Natura Group mentioned in its business annual report in 2021 that Aesop's primary goal in 2022 is to enter the Chinese market and achieve greater development in Asia, paving the way for Natura&Co's broader expansion.

In August this year, Aesop's first store in the Chinese mainland market was located in Shanghai. According to the known information, this shop was opened at the corner of Dongping Road, which has rich historical heritage and diversified styles of Shanghai style.

At the same time, the original location of Studious Tokyo in Nanli, Xintiandi, Shanghai, has been replaced with the enclosure of Aesop. It is not difficult to see that Aesop, who has coveted the Chinese market for a long time, is ready to show its strength in the Chinese market.

"Pure beauty" is a term often thrown out in the beauty industry, but few brands can claim to have so many loyal supporters as Aesop.

At present, Aesop has obtained advanced products in the process of product registration, and obtained the Good Manufacturing Practice (GMP) certificate required by the Chinese authorities. Aesop's manufacturing plant in Victoria, Australia has been authorized to purchase products for China. At the same time, accelerate the investment in digital platforms and CRM to support the omni channel entry strategy.

With the announcement of the State Food and Drug Administration that from May 2021, restrictions related to animal experiments will be relaxed and overseas brands without animal experiment data will be allowed to go on the market, a large number of brands, including Aesop, have started to apply for filing at that time.

While accelerating its expansion in China, Aesop has just announced that it will open a new physical store in London's iconic Regent Street. Regent Street was built in 1819 by the architect John Nash. The new Aesop shop was created by the brand's internal design team, trying to reflect the 200 year history of this street through traditional design.

One of the most exciting things about the new store is the addition of Aesop's facial care room. In addition, the brand also opened a free "queer" library, which is also in line with the brand store management concept that each store has its own unique design.

Suzanne Santos, the co-founder and chief customer officer of Aesop, once said, "Aesop has always been the representative of 'deviant' in the beauty field. As more and more brands are developing towards a more pure, more environmentally friendly and more inclusive direction, we should start to define Aesop again, just as this brand was defined at the beginning."

The goal of Aesop is to reach 1 billion dollars in brand sales by 2025. For brands, it is extremely urgent to rapidly expand the Chinese market. At present, many shopping centers in China have expressed their interest in investing in Aesop. If Aesop is successfully listed in the US stock market, it will undoubtedly have more actions in the Chinese market after raising funds.