‘Remarkable’ rebound: L’Oréal China’s strong Q1 results show appetite for beauty ‘remains intact’ despite COVID-19 – CEO
L’Oréal was able to rebound quickly to achieve growth in China in March, leading to a positive first quarter for the company despite overall sales for the quarter shrinking globally.
Chairman and CEO of L'Oréal Group, Jean-Paul Agon highlighted that the company’s performance in China was “remarkable”.
“China was able to close the quarter at plus 6% which is pretty amazing when you think about the difficulty that they had due to the pandemic.”
The firm credited its speedy recover to the early restoration of operational capabilities in February, strict application of safety measures to ensure a safe working environment, as well as the rapid adjustment of activation plans in favour of Online and O+O (Online + Offline) activities.
Additionally, the group tapped into the Women’s Day Festival, an online shopping event in China, to trigger sales.
L’Oréal China managed to gain significant market shares with a strong contribution from L’Oréal Paris, Lancôme, SkinCeuticals, Helena Rubenstein, 3CE Stylenanda and Kérastase.
Agon believes this is a positive sign that the global beauty market will bounce back quickly in the aftermath of COVID-19.
“As the example of China has shown, the current situation does not call into question consumers’ strong appetite for beauty products, which remains intact. The market should recover quickly as soon as measures to close sales outlets are lifted.”
The firm’s China division is also on track for growth in April and Agon is positive it will see a positive second quarter.
“In March already our sales in China were positive again and we are also on a positive trend for April, at between 5% and 10%. We are pretty confident in achieving a pretty strong double-digit growth in sales for China in the second quarter,” he said.
Beauty shows resilience
During China’s months-long lockdown, the firm saw demand for skin care and hair care while there was weakness in the colour cosmetics segment.
Additionally, sales for the firm’s active cosmetic brands such as CeraVe and La Roche-Posay, soared in China, driving the division’s double-digit growth in APAC.
Agon noted this was because most active cosmetic brands were sold in pharamcies and drugstores which remained open even during lockdown.
However, L’Oreal noted that it was seeing consumption recover across all categories post-lockdown, even in colour cosmetics.
“All categories are gaining traction and consumption is bouncing back positively with progressive recovery for make-up especially in China where everyone is wearing masks and there’s no great incentive to wear lipstick or make-up in general,” said Agon.
Agon believes the rest of the markets will see similar recovery patterns once lockdown measures are lifted.
“Personally, I think that once the stores open again and once the confinement measures stop, we will be back to consumption that's pretty similar to what we have seen before.”
He pointed to the strengthen and resilience of the cosmetics market in the face of global crisis, elaborating that in Wuhan, the epicentre of the outbreak in China, the beauty category showed the strongest recovery in all department stores.
“It's true based on previous experiences we have had that when consumers are able to shop again and get access to their brands, beauty will be back to very good consumption.”