L’Oréal pulled in €7.22bn sales for the first quarter (Q1) of 2020, down 4.8% on a like-for-like basis on the previous year. The reported earnings aligned with the beauty major’s forecast made at the end of March, where it also suspended 2020 guidance and pushed back its annual general meeting.
EMEA sales woes during coronavirus lockdowns
Whilst L’Oréal’s sales dipped globally, the company reported an even sharper decline across Western Europe, with sales down 7.7% like-for-like at €1.9bn; sales were also down 1.4% in Eastern Europe and down 5.6% in Africa and the Middle East.
L’Oréal said Italy had been particularly “adversely affected” by lockdown measures, as had Spain and the UK in more recent weeks; Scandinavian countries, the Netherlands and Germany, however, had proven “more resilient”.
For North America, L’Oréal sales dropped 4.8% and in Asia Pacific sales dipped 3.7%, though the company reported a surge of 6.4% in China as the market entered a recovery phase.
“All geographic zones have progressively been impacted by the closure of sales outlets and the introduction of lockdown measures: first of all China from January, and then in the rest of the world, particularly in Western Europe from the beginning of March, and in North America from the end of March,” said Jean-Paul Agon, chairman and CEO of L’Oréal.
“…In an environment that is evolving every day, lockdown measures will clearly continue to have a significant impact on the consumption of skincare and beauty products, and consequently on our business in the second quarter. However, as the example of China has shown, the current situation does not call into question consumers’ strong appetite for beauty products, which remains intact.”
Agon said the global beauty market should “recover quickly” as soon as lockdown measures and business closures were lifted.
Makeup ‘most affected’ consumer category but hair care booms
L’Oréal said its Luxe and Professional Products divisions had, of course, been heavily impacted by lockdown measures – down 9.3% and 10.5%, respectively – and many segments within the Consumer Products division had also suffered, where overall sales dipped 3.6%.
“The health crisis has had a widely contrasted impact on categories, distribution channels, regions and therefore brands. The category most affected is makeup, resulting in a clear temporary slowdown for Maybelline New York and NYX Professional Makeup, after a good start to the year,” the company said. Within consumer products, the facial skincare category had also slowed, it said.
By contrast, hair care “and above all home-use hair colour”, along with facial cleansing and hygiene products were accelerating, L’Oréal said – a trend that had widely benefited its Garnier brand.
L’Oréal’s Active Cosmetics division had also performed well in Q1 2020, with dermo-cosmetic brands like La Roche-Posay and CeraVe “well positioned to meet consumer expectations for hygiene and daily skincare products”, it said. Sales across Actives were up 13.2% like-for-like on the previous year.
E-commerce grows, crisis prompts ‘strong acceleration’ of digital transformation
Agon said e-commerce had been a key growth driver for the group during Q1 2020, up 52.6% on the previous year and now representing close to 20% of total sales for the group.
“The current crisis has led to a strong acceleration of the digital transformation on which L’Oréal is particularly well positioned thanks to its strength in e-commerce and its expertise in digital media, content and services which enrich the consumer experience,” the CEO said.
L’Oréal said it had a particularly strong e-commerce network across Northern Europe and the UK that had proven important in limiting the impact of store closures across these markets.