For retail behemoth Mecca, beauty may be in the eye of a buyer

Mecca has the largest market share for makeup in Australia with 21.2 per cent.

Jo Horgan has created a beauty retail phenomenon with her Mecca Brands business, but some believe the entrepreneur could be about to call time as the owner of the cosmetics giant that could be worth well over $1bn.

According to the latest data from IBIS World, Ms Horgan and her husband Peter Wetenhall have grown the business to one that generates about $1bn of revenue a year.

They entered The Australian’s The Richest 250 list for the first time in 2022 with an estimated fortune of $647m.

A Mecca spokesman declined to comment on whether the business was on the market.

There’s been speculation in the retail industry on and off for years over whether the pair are about to cash out and it’s thought to be inevitable they will exit or at least partially exit at some point.

But it’s possible that now the time could be right, with owners reading signals in the market that the competitive backdrop is becoming increasingly tougher.

One possible buyer is global beauty chain Sephora, which has just under 5 per cent of the Australian cosmetics retailing market.

Online retailer Adore Beauty, which made founder Kate Morris very rich through its $269.5m initial public offering in the middle of the global pandemic after the market valued the company at $635m, is entering the bricks and mortar cosmetic retailing space with the opening of the first store last week.

Plus, there’s threats of disruption as seen in the US with the ­affordable Miss A brand that sells $1 cosmetics. Also telling is the fact that The Body Shop, whose UK parent has collapsed, is discontinuing its cosmetics range.

Ms Horgan has exclusive deals with cosmetic brands that run out, and Wesfarmers plans to up the cosmetics offering at its Priceline pharmacy chain with the launch of the Atomica brand.

The general view around the market is that although Mecca has a fair amount of debt, it’s a good business.

Jo Horgan. Picture: Robbie Fimmano

One possible buyer is global beauty chain Sephora, which has just under 5 per cent of the Australian cosmetics retailing market, a similar level to Priceline, and has been unable to crack the local market in a big way due to Mecca’s exclusive makeup deals.

Mecca has the largest market share for makeup in Australia with 21.2 per cent.

Founded in 1997 and based in Melbourne, Mecca Brands operates as a makeup, skincare and beauty retailer across about 100 stores in Australia and New Zealand and products are sold online.

It also operates through China, entering the market in 2020 through a partnership with cross-border e-commerce platform Alibaba’s Tmall Global.

The company plans to expand its Australian footprint by 50 stores over the next few years.