The global beauty and personal care market has seen customer interest shift towards skin care products and hair care products over cosmetics, a trend exacerbated by the pandemic, and is bounce faster than fashion. Independent beauty brands compete with conglomerates like L’Oréal and Estée Lauder, making the beauty industry particularly competitive. L’Oréal has invested in both digital and durability strategies to compete. As the bottlenecks lift, beauty conglomerates will look to revive makeup sales.
In a note, Bernstein analyst Bruno Monteyne pointed out that L’Oréal had a low bar to beat compared to the same period last year, when sales fell 4.8% at the start of the pandemic. Yet, he stressed, L’Oréal had rebounded above 2019 levels, “but the chain closures and the weak composition [sales] average growth is always suppressed ”.
The cosmetics category has yet to rebound; the “Roaring Twenties” style “make-up fiesta” predicted by L’Oréal executives when the company’s annual results were announced in February did not materialize. While the active cosmetics, professional products and L’Oréal Luxe categories were all up double-digit (up 28.7%, 21% and 14.6% respectively), the consumer products division, which includes make-up brands like L ‘Oréal Paris, Maybelline and Nyx are down 0.7%. Excluding makeup, the division would have increased by 5%.
Agon still believes that “the prophecy will be confirmed.” Countries where blockages are lifted are showing positive signs, said Nicolas Hieronimus, who will succeed Agon on May 1 as chief executive. In the United States, China and Israel, mass makeup sales increased 43%, and luxury makeup sales increased 77%. The continued use of masks, however, is holding back sales. “Within makeup, there is one category that is still pulling the market down: it’s lipstick while eye makeup is doing well,” Hieronimus noted.
Agon stressed that makeup sales were in line with the larger market, which suffered during the pandemic. “Reassuringly, L’Oréal continues to significantly outperform the market, and expects to do so this year,” wrote Bernstein’s Monteyne.
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