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Beauty Boom: L'Oréal Sales Rebound After Lockdowns Ease

Published on Oct 23 2020 7:59 AM in A-Brands tagged: Featured Post / Trending Posts / L'oreal / Maybelline / Third Quarter Report

Beauty Boom: L'Oréal Sales Rebound After Lockdowns Ease

L'Oréal, the French company behind Maybelline cosmetics and Garnier shampoo, said it was back to revenue growth in the third quarter as it performed well with Chinese customers and kept up its product launches.

Like companies in the luxury goods sector, L'Oréal was hit hard by coronavirus lockdowns earlier this year when stores and airport retailers shut down. It was also hurt by hair salons having to close temporarily, as it sells professional products.

But revenues have since recovered in most divisions, including in the mass market unit that produces ranges like Garnier for sale in supermarkets.

Quarterly Performance

Overall sales came in at €7 billion (€670 million), for the July to September period, rising 1.6% from a year earlier on a like-for-like basis, which strips out currency effects and acquisitions.

That compared to a 19% year-on-year drop in the previous quarter, and analysts had expected sales to remain in negative territory.

The biggest improvement came not at L'Oréal's best known make-up brands like Maybelline, but from its active cosmetics division, which caters to dermatological conditions with labels like Vichy, La Roche Posay and CeraVe, which it bought in 2017.

Chairman and chief executive Jean-Paul Agon - who is preparing to hand over the CEO reins to company veteran Nicolas Hieronimus in May 2021 - told analysts on a conference call that the group had taken market share in this segment.

'Wellness' Boom

Asked about a potential 'wellness' boom, as people took care of themselves during coronavirus lockdowns, he added however that this had not been a major factor in the active cosmetics growth.

Agon said that L'Oréal had also outperformed rivals in the key Chinese market, where it has a strong presence, echoing improving demand in Asia noted by luxury goods makers such as Hermes and Louis Vuitton.

"The fact that Chinese consumers do not travel anymore is a pity for travel retail but a bonanza for the business we do in China," Agon said.

Luxury Lags

The group, which has launched a perfume campaign for a Valentino fragrance starring Lady Gaga, also said it had kept investing in marketing despite the crisis, and benefited from a further pick-up in its online sales.

But the performance of its luxury products unit, home to Lancome and which makes cosmetics for Armani, lagged that of other divisions, and remained in negative territory. This was partly due to the impact of travel restrictions, the group said.

L'Oréal has remained upbeat about the outlook for beauty products throughout the coronavirus crisis and despite concerns that lockdowns would discourage people from wearing make-up.

Agon said he was cautious about the current rise in COVID-19 cases including in Europe - and ensuing restrictions on movement - but still expected growth in fourth quarter sales, and the group confirmed that it expected like-for-like sales to expand in the second half of 2020 as a whole.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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