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L'Oréal Sales Powered On By Luxury Skincare Fad

By Dayeeta Das
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L'Oréal Sales Powered On By Luxury Skincare Fad

Enduring demand for luxury skincare products boosted L’Oréal sales in the first quarter, helping the Maybelline-maker beat growth forecasts, along with a slight improvement in its struggling lower-end product ranges.

The French firm reported that revenues rose by 11.4%, to €7.6 billion ($8.58 billion), up 7.7% on a like-for-like basis, stripping out the effect of currency swings and acquisitions.

That beat the 6.6% comparable sales growth forecast in an Infront Data poll of analysts for Reuters, matching the pace of growth notched up in the last three months of 2018.

Growth Drivers

L’Oréal reported that thriving demand among Asian shoppers had helped sustain growth. The region has now overtaken North America as the largest contributor to revenue.

In an encouraging sign for rivals like US-based Estée Lauder, L’Oréal cited China as one especially bright spot in the quarter, despite its slowing economy. It reported that India, Malaysia and India were also doing well.

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L’Oréal has been trying to revive its sluggish mass-market division, home to its Garnier shampoo ranges, at a time when its higher-end products, like Lancôme and Kiehl’s, are finding favour with shoppers seeking anti-ageing treatments, for instance.

Consumer Trends

L’Oréal is not alone in attempting to revamp its middle-of-the-road brands sold in supermarkets, with Nivea-maker Beiersdorf also highlighting a consumer trend towards more personalised products that was pressuring this segment.

Cosmetics-makers are partly betting on greener ranges, with more natural ingredients, to try and lure shoppers back.

Comparable sales growth at L’Oréal's mass-market unit progressed to 3.3% in the first quarter, from 2.8% in the previous three months – a still-sluggish rate, but slightly above expectations.

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L’Oréal CEO Jean-Paul Agon said in a statement that the economic environment was “volatile, uncertain”, but that the group was encouraged by its start to the year. It maintained its goal of outperforming the broader beauty market.

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

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