L’Oreal and Sephora show that cosmetics keeps on growing
The French luxury and cosmetics giant LVMH reported slowing growth and even a decline for some segments during the first quarter of the year. Despite the gloomy figures, one area stood out as a growth segment: cosmetics. Sephora keeps on growing handsomely, even in a slowing market for the luxury conglomerate. The cosmetics segment of LVMH reported a +5% growth for the first quarter (+11% organic) as the overall LVMH sales declined by -2%.
Sephora has grown for 12 consecutive quarters after the pandemic ended. Since Q1/2021, Sephora's revenues have grown by 79%.
“The business has been pretty strong with Sephora and with our Perfumes & Cosmetic division during the quarter. The Prestige business is doing well. So we have no particular signs of slowing down. Obviously, we were growing very strong double-digit last year. It will not last forever, and it will normalize at some point. But the various categories we are operating in, particularly makeup and hair care at Sephora, are doing very well.”
L’Oreal continues strong growth
The French cosmetics giant L’Oreal reported another set of strong growth with +9,4% growth during the first quarter. The business is going strong on almost all fronts. Only North Asia saw revenues decline and the Luxe segment has declined to a low single-digit growth.
Other segments of the L’Oreal business saw double-digit growth despite strong growth over the previous years after the pandemic. Especially notable is the growth in the company's three big segments: Consumer Products, Europe, and North America. Despite being 10+ billion € businesses, they keep growing by double-digits.
In North America, Amazon remains a strong competitive force for L’Oreal products. The company that the platform is “a great booster” for sales in the US. L’Oreal is a company that has mastered digital platforms. In the West, it is strong with Amazon, whereas in China, it has played well all along on Tmall and JD.
Currently, L’Oreal is learning to utilise Douyin (Chinese version of Tiktok) as a sales platform. This will be a strong learning as Tiktok in the West starts to improve its selling and fulfilment capabilities.
In Europe, L’Oreal emphasised that consumer demand would remain strong, stronger than in the US market. This is somewhat surprising, as European countries have been struggling with low economic growth lately, and many specialist retailers have had difficult times.
The malaise in European consumer sentiment does not influence the beauty industry, which has grown robustly over the last few years, with some retailers growing almost explosively.
“We estimate the market to be around plus 9% in Europe. So it’s a very dynamic growth. And indeed, we’ve beaten the market.
There is strong consumer demand in Europe. Dermatological Beauty in Europe doing as good as it does in other markets. And it’s almost double-digit on Lux, mostly driven by fragrances. So we are gaining share in Europe on the market that is dynamic.”