Term Sheet | Fortune L’Oréal's radical innovation

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From: CEO Daily | Fortune - Thursday Jun 12, 2025 10:34 am
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Thursday, June 12, 2025
L’Oréal’s CEO is betting on radical innovation in the age of AI


• In today’s CEO Daily: Peter Vanham on L’Oréal’s radical innovation.
 • The big story: Former Sen. Loeffler’s quiet financial holdings.
 • The markets: Glum over trade prospects and Mideast tensions.
 • Analyst notes from UBS, BofA, and Deutsche Bank.
 • Plus: All the news and watercooler chat from Fortune.

Good morning. Peter Vanham writing from Geneva. L’Oréal has been in the beauty business since 1909, but these days the company—No. 348 on the Fortune Global 500—is squarely in the innovation business. The French cosmetics company has long been known for its iconic brands like Lancôme, Garnier, and Maybelline. But in today’s competitive global landscape, its CEO Nicolas Hieronimus told me recently, that radical innovation is propelling the company forward, with new products totaling 10-15% of its global business each year. 

“We have always considered our business model was to bring to market products that are state of the art, charge a bit more, and globalize,” Hieronimus told me. But in the AI era, the “state of the art” bit has taken more of a front seat than ever at the company, which now invests over €1.3 billion per year in research, and even more in technology. 

It’s that mindset that propelled L’Oréal to claim the top spot in Fortune’s inaugural Europe’s Most Innovative Companies ranking, which we published today. In it, Fortune and Statista ranked Europe’s 300 most innovative companies, considering product and process, as well as innovation culture. 

The real driver of L’Oréal’s innovation, Hieronimus stressed, is technology. “Technology is an augmentor upstream for research but also downstream for the consumer,” he said. Upstream, AI now allows the company to scan hundreds of new molecules per year, whereas in the past it took months to do one. 

“It’s a fantastic opportunity,” he said. “Our labs are powered by AI. It is an advantage. We have 16 terabytes of proprietary data on beauty. We use AI in research to scan new molecules, using digital twins.” 

The commercial result, Hieronimus said, is that “[AI] allows us to reformulate faster, but also to come up with new products.” He pointed to the new Laroche Posay Mela B3 anti-dark spot serum containing one such new molecule, Melasyl, as one such example. 

Downstream, the use of agentic generative AI is also starting to yield results, Hieronimus said. After experimenting with virtual try-outs and other tech-enabled online offerings, L’Oréal last year launched its L’Oréal Paris Beauty Genius, an AI agent that advises consumers on their purchases. 

More than 100,000 consumers already use the Beauty Genius, Hieronimus said, leading to benefits for both consumers and the company. “If you recommend the right product, [your consumers] remain loyal,” he said. These loyalists, the company finds, purchase up to eightfold the amount of L’Oréal products another consumer would. Other Fortune Global 500 companies that made it to the top 10 of our Most Innovative Companies list include aircraft engine maker Rolls-Royce (No. 3), pharma giants GSK (No. 5), Sanofi (No. 6), and Novo Nordisk (No. 7), and Europe’s largest tech company, SAP (No. 9). You can find the full list here.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com
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Top news

Huang makes big break from competitor

During an appearance at Viva Technology in Paris, Nvidia CEO Jensen Huang said he “pretty much disagree[d] with almost everything” that Dario Amodei, CEO of competitor Anthropic, predicts about AI advancements. That includes the idea that AI will replace as much as half of all entry-level office jobs within five years. 

Exclusive: Former Sen. Kelly Loeffler’s quiet financial holdings 

Fortune exclusively reported on Wednesday that Former U.S. Sen. Kelly Loeffler has privately owned 136,555 shares worth of stock in the parent company of Newsmax, a conservative news network that she frequently appears on. Loeffler notably did not divest this stock in her capacity as President Donald Trump’s Small Business Administration administrator.

China's 6-month licenses

China is putting a six-month limit on rare-earth export licenses for American automakers and manufacturers, the Wall Street Journal reports. This gives Beijing leverage on the U.S. if trade tensions flare up again. It also makes predicting the future that much harder for American industry. China is also demanding buyers hand over sensitive business information.

Mideast tensions lead to U.S. withdrawals

The U.S. State Department and Pentagon are moving to withdraw some Middle East personnel as tensions with Iran rise. That includes U.S. Embassy personnel in Baghdad and nonessential personnel and family members in Bahrain and Kuwait. The tensions come ahead of a new round of nuclear talks.

Starbucks' big investment in employees

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Trump's unilateral tariffs

President Donald Trump said he planned to send trading partners letters setting unilateral tariff rates in the next 1-2 weeks, ahead of a July 9 deadline to reimpose higher duties on dozens of countries. The president has often set 2-week deadlines, only for them to come later or not at all. 

Musk's Trump chat

Before the Tesla CEO posted on X about how he regretted his anti-Trump posts that “went too far,” he called the President late Monday night, the New York Times reports. The call came after the world's richest man spoke with Vice President JD Vance and White House chief of staff Susie Wiles about the path to a truce.
The markets

• S&P 500 futures moved down 0.4% before the opening bell this morning, but are still priced (barely) above the 6,000 mark. The S&P 500 fell 0.3% yesterday. The index is up 2.4% YTD. Globally, investors were largely negative: All the major Asian indexes were down, save for Shanghai (which was flat). The Stoxx Europe 600 was down 0.6% in early trading, while other European markets were down to flat.

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From the analysts 

• UBS on the CPI: “Yesterday’s US consumer price inflation data showed, as expected, faint hints at the effects of trade taxes and clearer examples of weak demand. The declining number of people wishing to visit the US helped weaken air fares. Goods where inventory is held for longer (like autos) avoided tariff effects for now. Imported goods with shorter inventory times—like bananas—saw price surges. Large consumer appliances had the second largest price increase on record. Producer price data may show more tariff price effects, as these goods sit closer to the point of import in the supply chain,” per Paul Donovan.
 • BofA on Fed cuts: “The benign May CPI print trims the tails of the Fed policy path distribution. Combined with the solid May jobs report, the CPI data reduce the chances of a nasty bout of stagflation. That means a lower risk of ‘bad’ cuts (due to a collapse in the labor market) but increased probability of ‘good’ cuts (solid labor market and slowing inflation). Since we expect to see the impact from tariffs more clearly in coming months, we remain comfortable with our Fed call: on hold this year and 100bp of ‘good’ cuts next year,” per Stephen Juneau et al.
 • Deutsche Bank on Mideast tensions: “There were a few creaking joints in markets yesterday, as growing tensions in the Middle East saw Brent crude oil prices (+4.34%) post their biggest daily jump of 2025 so far, moving up to $69.77/bbl. That came as the US said they were pulling some staff from their Baghdad embassy, with fears mounting about an escalation between the US and Iran. Sentiment wasn’t helped by various headlines, and CBS News reported that part of the reason for the US moving staff out of the Middle East was because US officials had been told that Israel was ready to launch an operation into Iran. The move also followed comments that President Trump made to the New York Post he was ‘less confident’ about getting Iran to agree to end its nuclear program, and Iran’s defence minister warned that Tehran would target US bases if ‘conflict is imposed on us.’ So after a strong start to the session, those headlines saw the S&P 500 (-0.27%) lose ground by the close, with futures this morning down another -0.34%,” per Jim Reid.

Around the watercooler
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