THE WHAT? L’Oréal has reported its results for the first quarter of the current financial year. The French beauty giant saw sales drop a modest 4.8 percent thanks to a last-minute uplift as business resumes in China as well as a strong performance from its e-commerce channel.
THE DETAILS Indeed, Chairman and CEO Jean-Paul Agon noted that e-commerce sales now account for 20 percent of sales and digital was a key growth driver for the group this quarter, up 52.6 percent thanks to restrictions on movement across the globe.
“The first quarter of 2020 has seen a decline in the cosmetics market of around 8 percent. In these difficult circumstances, L’Oréal has succeeded in outperforming the market with sales at -4.8 percent like-for-like,” Agon revealed.
The group’s professional and luxe divisions felt the biggest impact, while consumer products saw a more modest decline and active cosmetics continued to post growth – mainly because pharmacies are among the few retailers allowed to continue to trade and the unit comprises a portfolio of brands that is adapted to the strong demand for health-related products.
In terms of geographic performance, all regions were affected, albeit progressively as closures spread across the globe, first of all in China from January, and then in the rest of the world, particularly in Western Europe from the beginning of March, and in North America from the end of March. As for travel retail, as you’d expect, the channel has been heavily impacted by the sharp restrictions on travel worldwide.
Agon did note, however, that China is already seeing an encouraging recovery in beauty product consumption.
THE WHY? The coronavirus pandemic has essentially turned L’Oréal’s results on its head – whereas luxe, travel retail and China were the highlights at the close of the year, it’s now active cosmetics, consumer hair care and home hair color kits that have kept tills ringing.