Shift Of Beauty Business Online During Pandemic Helps L’Oreal Sales Rebound

With shoppers of beauty products flocking to shop from online sources during the coronavirus pandemic, the biggest cosmetics group of the world L’Oreal reported better than expected growth in revenues for the fourth quarter of the last year.

The closure of airport duty-free shops and high street stores during the Covid-19 pandemic and the shift in consumer habits with people being forced to stay more indoors and put on face masks had reduced the demand for make-up had dealt a severe blow to the earnings at luxury retailers and beauty companies.

However an increase in the demand for skincare products as well as pampering treatments to be used at home such as hair dyes have benefitted cosmetics groups.

The partial lifting of lockdowns during the second half of 2020 and the reopening of hair salons had also been a driver for increased demand for the company’s professional products, said France’s L’Oreal, which is the force behind the brands Maybelline and Lancome.

On the overall, there was a 62 per cent growth in the online revenues of the company as this business mode accounted for more than a quarter of the total sales of the company.

“With the pandemic, we’ve advanced by five years on the digital side,” Chairman and Chief Executive Jean-Paul Agon told Les Echos newspaper, prior to a conference call with analysts.

In the October to December period, the sales of L’Oreal reached 7.88 billion euros ($9.56 billion) which was flat for the same for the same period a year ago on a reported basis. That was however a growth of 4.8 per cent for like-for-like, without currency effects and acquisitions.

That number beat estimates of the market which was between flat to 3 per cent growth and was higher than that in the previous quarter.

The company said that its saw “spectacular” sale for its products in China in particular which was an echo of the comments made by fashion groups such as Louis Vuitton owner LVMH on its turnaround after the easing of pandemic induced lockdowns.

The 8 per cent drop in revenues for the broader beauty market in 2020 was easily outperformed by L’Oreal even though the yearly revenues of the company dropped by 8 per cent like-for-like, said Agon, who will be handing over the CEO role to Nicolas Hieronimus later this year, in an interview to Les Echos.

He added that the company was also helped by holding all its product launches for 2020.

While being confident of a surge in demand for beauty products in the longer run, Agon however remained prudent for 2021.

“I’m convinced that when we come out of this crisis, it will be like the 1920s,” he told the newspaper. “After years of anxiety, there will be a feeling of freedom, of wanting to party and go out and socialise again, and to wear make-up and perfume.”

At 3.75 billion euros, a 5 per cent fall in net profit for 2020 as a whole was reported by L’Oreal.  

(Adapted from CNBC.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s