Urban Decay scrubs up well for L’Oreal

L’Oreal has made a foray into the makeup market for younger consumers with the purchase of niche US brand Urban Decay.

The French cosmetic giant bought California-based Urban Decay from Castanea Partners, a private equity firm, for an undisclosed sum.

The brand was created in 1996 by Sandy Lerner in response to the gap in the market for bright, vivid makeup colours.

“If the cosmetics industry’s ‘big boys’ couldn’t satisfy her alternative makeup tastes, she would satisfy them herself,” the Urban Decay website says of its founder.

Ms Lerner drafted in makeup experrt Wende Zonmir and created Urban Decay. In the year ended June 2012, the brand had sales of $130 million (£81 million).

Urban Decay is“exactly the type of brand L’Oreal needs to beef up its make-up portfolio in the prestige channel,” said Liberum Capital analyst Pablo Zuanic of the deal, which he estimated at between $250 million (£156 million) and $300 million or slightly more than two times sales.

The specialist makeup market makes up a large 44 per cent share of the luxury cosmetics market in the US.