The French group L’Oréal unveiled yesterday, Thursday March 16, negative results for the first quarter of 2020 and an overall decline in its activities. Its Luxury division remains the hardest hit by the epidemic, despite some signs of recovery in China and an e-commerce sector that remains very strong.
L’Oréal reported revenue of €7.55 billion in the first quarter of 2020, a drop of 4.3%. On a like-for-like basis, they were down 4.8%, compared with a market decline of around 8%.
While overall sales are significantly declining and the group’s performance is affected by the closure of points of sale and worldwide travel restrictions, the French leader in cosmetics is not affected in a uniform manner.
“Performance by Division is contrasted. The L’Oréal Luxury and Professional Products Divisions are the most impacted, due to the closure of perfumeries, department stores and hair salons in many countries. The Consumer Products Division experienced a more moderate decline, due in particular to the continued activity of the mass retail sector. Finally, the Active Cosmetics Division continues to show double-digit growth“, commented Jean-Paul Agon, Chairman and CEO of L’Oréal in an official statement.
The group’s Luxury Goods Division, usually the most profitable, is therefore the most impacted by the coronavirus epidemic. Sales of the Luxury Goods division declined on a like-for-like basis by 9.3% to 2.68 billion, but above the global luxury beauty market, estimated at around -16%.
While billions of people have been locked in their homes for more than a month, their purchasing habits have changed and the buying of beauty products no longer seems to be in vogue.
However, these developments do not completely compromise the world’s leading cosmetics company: “In an environment that changes daily, it is undeniable that containment measures will continue to have a significant impact on the consumption of skincare and beauty products and consequently on our business in the second quarter. But, as the example of China shows, this situation does not call into question consumers’ appetite for beauty, which remains intact“, adds Jean-Paul Agon.
Indeed, China has already shown an encouraging recovery in the consumption of beauty products. Thus, sales rebounded by 6.4% on a comparable basis in China.
Also, e-commerce remains very promising, up 57% worldwide.
Performance is down, but encouraging signs of growth give hope for a favorable outlook for the cosmetics giant. “The market should record a substantial recovery as soon as the measures to close points of sale will be lifted“, concludes Jean-Paul Agon in an optimistic tone.
Featured Photo : © L’Oréal
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