L’Oréal’s Q3 2022 sales up with active cosmetics, skincare and solid fragrances despite inflation
Last week, L’Oréal announced global sales of €9.58 billion for the third quarter (Q3) 2022, up 19.7% year-on-year, with like-for-like growth by 9.1%. Net profit was not reported.
In terms of division, active cosmetics took the lion’s share of growth in Q3, with sales up 38.8% to €1.3 billion and La Roche-Posay remaining the “leading contributor to growth” and CeraVe representing the fastest growing brand in the division. This was followed by growth in consumer products, up 19.1% to €3.54 billion, driven by the success of make-up; growth in L’Oréal Luxe sales, up 15.8% to 3.6 billion euros with a good performance from fragrances; and growth in sales of professional products, up 15.7% to €1.09 billion, supported by a buoyant haircare market.
Regionally, third quarter sales increased in all regions of the world, but the strongest growth came from Asia South Pacific, the Middle East, North Africa and Africa sub-saharan [SAPMENA-SSA], up 41.5% (30% like-for-like). Sales in Latin America increased by 36.5% (16.2% like-for-like); Sales in North America increased by 27.7% (9.3% like-for-like); Sales in Europe increased by 12.1% (10.5% like-for-like); and in North Asia, sales increased by 11.3% (+0.3% like-for-like).
“The global beauty market remained dynamic”
Nicolas Hieronimus, CEO of L’Oréal, said the company had achieved a “Very solid quarter”despite “unprecedented volatility, marked by health restrictions in China and inflation in the Western world”.
“The global beauty market has remained buoyant and consumer appetite for beauty products is intact. The combination of a robust business model, the agility and the commitment of its teams around the world has enabled L’Oréal to once again significantly outperform the market and strengthen its position as the world’s number one beauty company. . said Hieronimus.
Speaking to analysts on the company’s earnings call, he said there were of course concerns about inflation – particularly in the UK where inflation was at an all-time high for 40 years – but the breadth of the portfolio and the consumption target of L’Oréal helped.
While the UK has seen changes in consumer behavior, with fewer hair salon appointments and some dwindling beauty shoppers, L’Oreal has captured many of these changes, it said. -he declares. For example, people were going to the hair salon less, at-home hair dyes were growing, as were high-end shampoos, and L’Oreal had lots of deals at different price points across all categories for any bargain behavior.
L’Oreal’s typical consumer profile also meant inflation didn’t hit businesses so hard, Hieronimus said.
“Overall, stocks are doing quite well in the UK because I think the consumers we sell our products to in most countries are not the most vulnerable to inflation… We are so, of course, watching what’s happening in the UK, but if I look at France, if I look at Spain, where I’ve just come from, we continue to see good momentum.
“…Generally, people are getting used to inflation and have the intention to spend,”said the CEO.
China – a market facing significant challenges given continued and repeated COVID-19 lockdowns – was different, with business weighed down by these ongoing restrictions.
Focus on fragrances and skin care
According to comments made during L’Oreal’s first half (H1) 2022 results, Hieronimus reiterated the strength of fragrances globally.
He told analysts that fragrance growth was “a trend that will last”, with L’Oréal continuing to perform ahead of global market growth.
“It’s a category that, you know, men, women around the world have really fallen in love with post-COVID,”he said. And the continued engagement with fragrances was driven by self-indulgence and continued socialization among consumers, he said.
On the business front, however, the CEO said L’Oreal had been unable to realize its true growth aspirations in the category due to a shortage of glass bottles.
“Obviously, after COVID, many glass manufacturers had shut down some furnaces or slowed down their business. It takes time to rekindle. And as the market rebounded much stronger than expected, and as we really outperformed the perfume market, we struggled to have everything we needed (…) We must admit, we are today now limited by capacity and unfortunately this is one area where you can’t build capacity very quickly; it takes time. So it’s just a matter of good forecasting, good negotiations, and hopefully given our size, we can get good allocations from the glass manufacturers.
In skincare, he said active cosmetics were “really fly”, with SkinCeuticals, a brand that was a small European drugstore brand 10 years ago and is now enjoying double-digit growth. L’Oréal Paris also performed well in skincare thanks to the launch of its pure vitamin C serum, which had been a “phenomenal success”.
Future growth and innovation
Regarding the future of the entire global business, Hieronimus said: “Despite the current uncertainties, we remain confident in the outlook for the global beauty market, which once again confirms its resilience; confident in our ability to innovate; and confident in our ability to outperform the market and deliver another year of sales and earnings growth in 2022.”
L’Oréal, he said, would continue to invest in innovation, enhancement and emerging markets to ensure future growth.