Like superannuation, current financial results from the major beauty players should be viewed in the context of the massive annual increases in revenues achieved over the past five years.
Following record sales over the past two years, L’Oréal, the world’s largest beauty company, has reported an 11.7 per cent drop in revenues for the first six months of the year to 13.07 billion euros (AUD21.51 billion).
Regional markets heavily impacted by lockdowns and the closure of perfumeries, hair salons and department stores were particularly hard hit. Sales in Western Europe slumped 16.1 per cent to 3.5 billion euros (AUD5.76 billion) and revenues in Eastern Europe dropped 12.9 per cent to 789 million euros (AUD$1.29 billion).
But the future looks brighter. Online, skincare and haircare sales in Western Europe have doubled since mid-May, says L’Oréal.
The Asia/Pacific region suffered the smallest decline – 3.9 per cent. While North American revenues slid 15.2 per cent.
Yet despite the lower results, chairman and CEO, Jean-Paul Agon, said the group had proved resilient year-to-date.
The Active Cosmetics Division, including the La Roche-Posay, CeraVe, Vichy and SkinCeuticals brands, kicked the downward trend with a 9 per cent surge in sales for the period.
A dive in makeup and travel retail sales impacted the Luxe Division, normally a double-digit growth engine for L’Oréal. Revenues fell 16.8 per cent in the first half. But China has returned to growth in the prestige beauty market and Germany has also performed well.
The Consumer Products Division, including the L’Oréal, Maybelline New York and Garnier brands, is the company’s largest division. Revenues slumped 9.4 per cent as makeup sales suffered. But haircare and home hair colourants made up a significant part of the slack.
E-commerce has delivered in spades for L’Oréal with global sales surging 64.6 per cent in the first half of the year, fueled strongly by China where sales increased 30 per cent in the second quarter.
We approach this second half with lucidity, confidence and resolve, adds Agon.
“Lucidity because the global health crisis is unfortunately not over. Confidence because consumers’ appetite for beauty is intact, access to points of sale should be easier going forward, and e-commerce will continue to get stronger,” he said.
“And finally resolve because in the second half of the year, we are embarking on an aggressive plan of new product launches and business drivers to stimulate, in partnership with our retail partners, the return of consumption of beauty products.”