L’Oréal: COVID-19 to have ‘higher impact’ than initially forecast

By Kacey Culliney

- Last updated on GMT

L'Oréal predicts first-quarter (Q1) earnings in 2020 to be down 5% on the previous year (Getty Images)
L'Oréal predicts first-quarter (Q1) earnings in 2020 to be down 5% on the previous year (Getty Images)

Related tags coronavirus COVID-19 L'oréal financial results

L’Oréal has pushed back its annual general meeting and suspended 2020 guidance as it braces for a more significant impact on business than first anticipated from the ongoing coronavirus crisis.

The beauty major said back in February that whilst the coronavirus (COVID-19) outbreak would cause a temporary slowdown, it remained confident it could still outperform the market in 2020.

Yesterday, however, L’Oréal’s Board of Directors said the company would push back its annual general meeting – set to take place on April 21; now scheduled for June 30 – and suspend 2020 guidance due to a “lack of visibility”​ on when the coronavirus crisis would come to an end.

The company said these decisions had been made “in exceptional circumstances linked to the COVID-19 epidemic” ​and more information would be provided after the publication of its first quarter (Q1) sales on April 16, 2020.

Global impact on beauty business and consumption

L’Oréal said all its global teams had been mobilised to help the company “traverse this unprecedented crisis”​ – it launched a European solidarity plan earlier this month​ – and said its goal was to re-accelerate business as soon as conditions permitted in each geographical zone. But it said business had, and would continue to be, affected by COVID-19.

“The spread of the pandemic to all geographic areas, and the measures taken by various countries in terms of store closures and the containment of consumers, will have a higher impact than initially forecast on the consumption of cosmetics and beauty products, and therefore on our business in the coming months, even if we are currently seeing encouraging signs of recovery in Chinese consumption,”​ L’Oréal said in a statement.

The company said it expected Q1 2020 global to drop 5%, compared to last year.

In the meantime, the company said its priority during this “difficult period”​ continued to be ensuring the welfare of its employees and partners worldwide.

Coronavirus bites into beauty business

Japanese personal care major Shiseido also recently acknowledged it was bracing for economic impact as the novel coronavirus continued to spread through Europe and the Americas​, despite its China business also showing encouraging signs of recovery.

Masahiko Uotani, president and CEO of Shiseido, told shareholders in a recent meeting: “COVID-19 is now expanding at a significant speed in Europe and the Americas. It has now become definite that the original company plans will be negatively affected.”

Widespread lockdowns and suspension of manufacturing across both regions, Uotani said, had led to a drop in customer store visits and greatly declining sales. There were also manufacturing and supply chain issues brought about by these lockdowns, he said.

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