No worries: L’Oréal Group confident it can outperform beauty market in 2020 despite COVID-19 impact

By Amanda Lim

- Last updated on GMT

L’Oréal confident it can outperform beauty market in 2020 despite COVID-19 impact

Related tags COVID-19 L'oréal China

L’Oréal Group CEO cautioned that the coronavirus outbreak (COVID-19) would cause a temporary slowdown but remained confident that the company would still be able to outperform the market in 2020.

The company recently reported 9.6% growth on a like-for-like basis in the fourth quarter of 2019.

The strong finish helped the company achieve its strongest sales performance in a decade, growing 10.9% from the previous year – up 8% on a like-for-like basis.

“We are starting this new year and this new decade stronger than ever​,” said Jean-Paul Agon, Chairman and CEO of L’Oréal Group.

“However, the coming weeks as you can understand will certainly be challenging for the people of China in their battle against the coronavirus epidemic, and we want to convey our deepest solidarity with them,” ​he added.

Agon said that the company was taking the appropriate measures in order to contain the epidemic, highlighting that its priority was to ensure the safety of its employees in China.

The impact of the COVID-19 is expected to affect L’Oréal's sales in China and its Asian travel retail business.

“This context will have a temporary impact on the beauty market in the region and therefore on our business in China and Travel Retail Asia, even if it is too early to assess it,” ​said Agon.

Despite this, Agon was confident that the company would continue to grow its sales and profits.

“The experiences we have had with similar situations in the past [like SARS and MERS], show that after a period of disturbance, consumption resumes stronger than before,” ​he said.

“Therefore, at this stage, and assuming that this epidemic follows a similar pattern, we are confident in our capacity this year again to outperform the beauty market and achieve another year of growth in both sales and profits.”

The company is counting on its strong online channel to help it pull ahead in the weeks to come.

“E-commerce will definitely help as people can order products to be delivered to their homes. It will certainly have an impact in the weeks to come,”​ said Agon.

“One good thing is that we are very strong on e-commerce in China. We are probably the strongest player in China on e-commerce. It was almost 50% of our business in China last year.”

Strength in China

L’Oréal had an impressive year in China, growing 35% overall, thanks in part to the acceleration in the last quarter.

“One of the reasons for the acceleration for the last quarter was the amazing success we had with 11.11. Singles' Day has become a major event in terms of business in China,” ​said Agon.

Additionally, its Active Cosmetics division grew 54% thanks to a ‘dynamic’ dema beauty market and strong e-commerce sales.

The Luxe division grew 39% thanks to its strong portfolio which includes brands such as Lancôme, Giorgio Armani and Yves Saint Laurent.

In the Consumer Products division, the group saw growth of 30%, growing three times compared to the growth of the mass beauty market in China.

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