French beauty house L’Oréal has posted a strong nine-months performance notable for what Chief Executive Officer Nicolas Hieronimus described as a “remarkable acceleration” in the third quarter.
Q3 sales rose by +14.9 percent (like-for-like) compared with pre-pandemic 2019 and +18.0 percent year-on-year to €23.19 billion (US$26.90 billion). For the first nine months, sales were up +9.3 percent over the same period in 2019. All divisions increased their growth over two years (i.e. 2021 v 2019) quarter after quarter.
L’Oréal Luxe posted impressively strong Q3 revenue growth of +25.4 percent like-for-like (+23.5 percent reported) with an increase over two years of +13.3 percent compared with the third quarter of 2019.
“The division significantly outperformed an already dynamic market. It saw very strong growth in North America and also consolidated its leadership in North Asia, driven by Mainland China and travel retail,” the group said.
The Mainland China market, however, slowed down as a result of public health restrictions in Q3 that led to the closure of brick-and-mortar outlets during the summer as well as restrictions on travel, particularly to Hainan.
Commenting on the Q3 COVID-driven slowdown in travel to Hainan during a post-results briefing, Hieronimus said, “Hainan like China [overall] had a bad Q3 in terms of traffic. Traffic was down, hotel occupancy rates were down. So it was not a great summer for Hainan but since then we have had Golden Week which in Hainan was very buoyant. Yes, it’s slightly outside Q3 but we see that the total duty sales in Hainan [in Golden Week] increased by over +60 percent with the number of shoppers that more than doubled. So it seems that as soon as the COVID restrictions are ending, the appetite both for travelling where they can add and to shop duty free remains intact.”
“With the reopening of brick-and-mortar outlets all over the world, L’Oréal Luxe accelerated its sales both online and offline, demonstrating the strength of its selective distribution model,” the group said in assessing its overall Q3 performance.
Thanks to what the group called a solid launch plan, L’Oréal Luxe continued to gain market share in its three categories. In fragrances, growth was driven by the success of Yves Saint Laurent, Maison Margiela and Valentino, as well as highly promising launches of Alien Goddess by Mugler, Ralph’s Club by Ralph Lauren and Luna Rossa Ocean by Prada.
Skincare benefited from healthy sales of Yves Saint Laurent Pure Shots and Helena Rubinstein, Shu Uemura and Takami in Asia, as well as the “exceptional” worldwide growth of Absolue by Lancôme. The division strengthened its position in makeup, driven by the solidity of Lancôme and the confirmed success of Shu Uemura in Asia.
Hieronimus commented, “As a result of our agility, relevant strategic choices and strong investment in our brands, L’Oréal continues to significantly outperform a beauty market that is gradually returning to pre-crisis levels. All zones and all divisions are growing and contributing to the Group’s well-balanced growth. The US recovery is confirmed, and Mainland China has sustained strong quarterly growth over two years, despite a few upheavals in the summer. We have maintained an offensive product launch strategy, and our performance is evidence of our brands’ desirability and of consumer demand for cutting-edge innovations. While in-store sales have recovered, e-commerce continues to grow rapidly and accounts for 26.6 percent of sales.”
“True to our dual goal for economic and corporate excellence, we are proud that L’Oréal USA has reached carbon neutrality for all 25 of its sites. Moreover, the Group has been recognised as a Global Compact LEAD company by the United Nations for the seventh consecutive year, and ranked in Fortune’s Change the World list for 2021. Since the start of the pandemic, L’Oréal has been constantly gaining strength and is ideally positioned to continue to grow at its pre-crisis pace. We are more confident than ever in this growth momentum. In an environment which remains uncertain, our performance in the third quarter strengthens our ambition to outperform the market and achieve a year of growth in both sales and profits,” continued Hieronimus
(Source: The Moodie Davitt report)