Beauty Sales Grew Around 11{028e8b43b440f88d50a94b0ac799d5b93a220d942414697744f001bd74eb64d0} Worldwide in First Half

PARIS — The beauty market is bouncing back worldwide, with estimated sales growth of 11 percent in the first half of 2021, versus the same prior-year period.

That’s according to L’Oréal, which on Friday morning held a virtual conference with financial analysts and journalists to discuss the group’s results this year.

For the first time, the meeting was led by Nicolas Hieronimus, who became L’Oréal’s chief executive officer on May 1.

As reported, the maker of Lancôme, Kiehl’s and L’Oréal Paris products on Thursday evening reported it had returned to pre-pandemic growth in the six months ended June, with an acceleration of 8.4 percent in the second quarter compared to second-quarter 2019.

In the April-to-June period this year, company sales increased 29.6 percent in reported terms to 7.58 billion euros. On a like-for-like basis, sales rose 33.5 percent, outpacing analysts’ expectations.

“We are witnessing the recovery of the beauty market to almost pre-COVID-19 levels,” said Hieronimus, adding the pace of that remains contrasted, however.

By geographic zone, L’Oréal estimates the beauty market in the first half rose about 16 percent in North America, 14 percent in North Asia, 9 percent in both Latin America and the SAPMENA-SSA (or South Asia Pacific, Middle East, North Africa and Sub-Saharan Africa) zone, and 5 percent in Europe.

In the first half, L’Oréal redefined its geographic zones.

“With growth of 20 percent, the Chinese market is hot again, with an ever-growing appetite for beauty, especially luxury,” said Hieronimus. “Online remains strong as more platforms are entering the game, striking a new balance with the brick-and-mortar retail network, which is picking up the O-plus-O — online plus offline — ecosystem now fully embraced by consumers.”

He noted: “In the USA, the market is recovering strongly, particularly in the second quarter, with brick-and-mortar picking up, while e-commerce continues showing steady growth versus 2019.”

L’Oréal estimates that market growth in the U.S. during the first half stood at 17 percent.

Meanwhile, there was a slower bounce-back in Europe, with a 5 percent sales increase, due to intermittent lockdowns.

“But it’s getting closer to 2019, with the U.K. paving the way to the full-speed recovery,” said Hieronimus. “In general, the market situation is correlated to the sanitary situation, and markets like South Asia, Japan and some Latin America countries are still more uncertain.”

The executive discussed beauty product categories, as well.

“The long-awaited rebound of the makeup category initiated in China is spreading in the U.S. and in Europe, although still below the 2019 levels,” said Hieronimus of the segment, with sales growing an estimated 8 percent in the half.

“Skin care continues to thrive, and hair products are benefiting from the reopening of salons all over the world and a growing interest for hair routines,” he continued, referring to the categories registering 13 percent and 8 percent gains, respectively.

Fragrance saw the largest surge in sales growth, posting a 24 percent rise in the half.

By retail channel, e-commerce sales for beauty were up an estimated 24 percent.

“E-commerce continues to grow, albeit at a slower pace in the second half, facing last year’s huge acceleration and as distribution is being rebalanced by the opening of retail,” said Hieronimus.

Concurrently, travel retail sales advanced an estimated 17 percent.

“Travel retail is still being fueled by the strong growth of Hainan, the slight air-traffic rebound and the favorable comparatives in Europe,” he said. “However, it is still very much below the 2019 levels, as travel restrictions apply around the globe.

“Within this context, L’Oréal delivered an exceptional outperformance at twice the market pace and has returned to a pre-COVID-19 growth rhythm,” said Hieronimus of the group’s business overall. “With all divisions and regions winning share without exception, this has been a perfect Grand Slam for us.”

Hieronimus discussed L’Oréal’s product divisions and geographic zones. Among the callouts was the U.S. activity.

“The great news of the quarter is the comeback of L’Oréal USA,” he said, explaining the country’s sales strongly accelerated in the first six months, and especially during the second quarter, when revenues grew 47 percent.

“L’Oréal USA beat the market in all four divisions,” said Hieronimus. “The rebalancing of categories, notably between skin care and makeup; of channels, between brick-and-mortar and e-commerce, and the success of some of our launches and their digital activations are paying off and giving us confidence for the future,” he continued.

Hieronimus said the first half was also exceptional for the company in terms of profit and earnings per share. In the period, operating profitability was at 19.7 percent of sales, and the EPS increased 21.1 percent at 4.63 euros.

“The strong set of results come from the combination of our strong top-line growth, favorable category and channel mix effects, and SG&A [or selling, general and administrative expenses], which have remained rigorously controlled and contained by the absence of travel and events,” said Hieronimus. “This unique alignment of planets has allowed us to invest strongly in our brands to reinforce their desirability, while delivering solid profit growth. After this first part of the year, we can say that L’Oréal has offset the business losses of the COVID-19 crisis and returns to its cruising speed.

“Despite the uncertainties related to the sanitary conditions, we are confident for the short- and long-term performance of the company,” he continued.

Hieronimus said L’Oréal will leverage six dynamics, including the market growth, business footprint, digital, focus on innovation, brands’ strength and the group’s profit-and-loss model.

“In the second half, we will be comparing to a positive growth in 2020, but our ambition is to continue to accelerate versus 2019,” said Hieronimus. “We will also continue to invest strongly behind our brands and launches, and hope to resume some traveling and events in person.

“All in all, and pending the evolution of the pandemic, we are confident in our ability to once again outperform the beauty market and to deliver another year of growth in sales and profits,” he said.

For more, see:

L’Oréal Returns to Pre-COVID-19 Growth in H1

French Chanteuse Yseult on Why Her L’Oréal Ambassadorship Is a Big Deal

L’Oréal Luxe Italia to Launch Initiative to Support Local Perfumeries

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