‘Clearly bouncing back’: L’Oréal Q1 2021 global sales surge despite Western Europe declines
Last week, L'Oréal announced that for the first quarter (Q1) of 2021, it had totted up worldwide sales of €7.6bn, up 10.2% on a like-for-like basis versus Q1 2020. Its Active Cosmetics business continued to be the strongest-performing division, with sales up 28.7% like-for-like; this was closely followed by a 21% spike in like-for-like sales for Professional Products in Q1 2021.
Western Europe woes – a region ‘still impacted’ by COVID-19 measures
Regionally, Western Europe saw like-for-like sales decline -2.4% – the only region to see a decline in Q1 2021 – with €1.9bn sales generated during the quarter. Eastern Europe and Africa and Middle East showed like-for-like sales growth of 10.7% and 12.7%, respectively. APAC like-for-like sales rose 23.8%; Latin America grew 15.1%; and North America was up 6.3% like-for-like.
“All geographic zones are growing, with the exception of Western Europe still impacted by the measures associated with the health crisis,” said Jean-Paul Agon, chairman and CEO of L’Oréal.
The closure of perfumeries, department stores and hair salons in several countries across the region, along with restrictions around social interaction, had contributed to a slow in business for L’Oréal here. Despite this, Agon said that as the environment related to COVID-19 continued to improve “progressively”, with the rollout of vaccination programmes worldwide, L’Oréal remained in a “fighting spirit mode” focused on product launches and investments to support growth of its brands.
Beauty is ‘clearly bouncing back’ – innovation and growth to come
“…In spite of the health crisis and the ongoing associated measures in some countries, particularly in Western Europe, the beauty market continues to recover. Against this backdrop, L’Oréal has started the year with very strong growth at +10.2% like-for-like in the first quarter, significantly outperforming the market,” Agon said.
Speaking to analysts on the company’s Q1 2021 earnings call, he added: “It’s very difficult to anticipate what will happen in the next quarters but, as usual at L’Oréal, we are pretty optimistic and positive. We think that the market is clearly bouncing back.”
He added that e-commerce would continue to be a “very strong engine of growth for L’Oréal” in 2021 and had proven particularly promising even in Western Europe, where growth was higher than China at over 80%.
Active Cosmetics builds on 2020; Consumer Products stable despite makeup ‘lacklustre’
For L’Oréal’s Active Cosmetics division – the only business unit to grow in sales terms for the full-year of 2020 – sales continued to build in Q1 2021. The company said this was thanks to “solid foundations including close relationships with healthcare professionals, a portfolio of brands that are perfectly aligned with the health aspirations of consumers, and strong positions in skin care”.
This division also showed a “notable confirmation of robust growth in Western Europe”, with CeraVe rapidly developing in the UK and La Roche-Posay showing “dynamism” across the quarter.
Nicolas Hieronimus, the incoming CEO of L’Oréal, added in the earnings call that CeraVe had been a “victim of its own success”, with demand for products outstretching forecasts and contributing significantly to growth of the Consumer Products division. During Q1 2021, CeraVe doubled in size globally.
For L’Oréal’s Consumer Products division, Agon said business had remained “stable” in Q1 2021, “still held back by its high exposure to the makeup category which remains lacklustre”.
Hieronimus added, though, that despite makeup remaining a difficult segment – “still very impacted by the limited social interaction” – there had been promising growth in North America.
More broadly, hair colour maintained double-digit growth and hair care experienced a “very dynamic quarter”, according to the company.
Professional Products tapping into ‘underlying trends’ like digitalisation and e-commerce
L’Oréal noted that in Q1 its Professional Products division had performed particularly well despite serving a market still largely impacted by the COVID-19 crisis.
“The division has again strengthened its leadership in the industry, taking advantage of the underlying trends in the sector: the digitalisation of salons, the development of independent stylists, and the explosion of e-commerce,” the company said.
Growth in the division had been seen across all regions, with a “record performance” in the US and strong e-commerce growth in China. Western Europe also maintained its growth momentum, particularly in Germany and France.