L’Oréal Group saw slower sales in Q2
Sales for Q2 reached €10.88bn, which was up by 5.3% on a like-for-like basis compared to Q2 in 2023, but below the predicted growth of 5.9%.
For the group, this was the slowest quarter since the beginning of 2022. This echoed a similar story with LVMH’s perfumes and cosmetics sales announcement last week. For Q2 2024, LVMH’s beauty division sales only grew by 4% – a 3% drop from 7% in the first three months of the year.
Many have speculated that the global beauty market is now simply adjusting after a surge of sales post Covid-19.
Meanwhile, for the entire first half of 2024, L’Oréal Group said its sales reached €22.12bn, which was up by 7.3% on a like-for-like basis.
The business also said it has continued to outperform the global beauty market and that its growth was driven by a combination of value and volume sales, balanced between offline and online retail channels.
In the financial results call, CEO Nicolas Hieronimus added that many of the company’s price increases had been implemented in the first half of the year, so there was also an expectation of there being “less value sales in the second half of 2024.”
In terms of regions, sales were strong in Europe and emerging markets, but weaker in the US.
China's depressed market had appeared to take its toll on the company’s global results – as Chinese consumers are still not spending as much on beauty products as they once were. Although the company noted that highly innovative products still sold well.
Dermatological Beauty and Consumer Products
L’Oréal’s Dermatological Beauty and Consumer Products divisions were still its two biggest success stories, yet Derma Beauty grew at a slower pace compared to prior quarters, mainly due to slower demand from the US market.
Consumer Products had strong performances in Europe and the emerging markets of Brazil, Mexico, and India.
L’Oréal said that the hair care category was a particular highlight, driven by continued premiumisation and that “L’Oréal Paris led the way with the remarkable success of Elvive Glycolic Gloss.”
Dermatological Beauty sales grew by 16.4% on a like-for-like basis and grew faster than the overall dermo-cosmetics market.
Notably, the struggling North Asia (China) market grew in double digits for Dermatological Beauty, as it pursued its global expansion.
The La Roche-Posay brand was the top growth contributor to the Division, which the company said was “fuelled by the success of breakthrough innovation MelaB3, addressing localised pigmentation issues based on the multi-patented Melasyl™ molecule.”
CeraVe continued to grow strongly and “significantly outperformed the global market,” according to the company.
L’Oréal Luxe division ‘sequential acceleration’
Interestingly, the L’Oréal Luxe division saw sequential acceleration in the last two quarters – in a market where many consumers have been moving away from but luxury products.
The division outperformed the luxury beauty market in Europe, North America and the emerging markets..
Fragrances were the most dynamic category and Colour Cosmetics was experiencing a rebound.
The luxury beauty brand Aesop, which the company acquired from Natura & Co in August 2023, continued its expansion plan. On the half-year financial results call, L’Oréal’s CEO noted that while the brand had a strong bodycare/wash offering, the business was currently working on improving its facial skin care offering.
Double-digit growth in Europe and Emerging Markets
The European region posted strong growth of +11.1% like-for-like and L’Oréal said it “continued to outperform a market that remained dynamic.”
On the results call, Hieronimus stated that “Europe is where we are strongest. Here, we make the market.”
The standout markets in the region were Germany-Austria-Switzerland, Spain-Portugal, and the UK-Ireland clusters.
Hieronimus also said consumer needs and tastes has become more sophisticated in eastern European markets and singled out Poland, where he had recently seen “incredible consumer sophistication and retail sophistication.”
The company said it was aiming to reach two billion new consumers in the next decade and that it remained “ambitious for Europe”.
China: a depressed beauty market
Hieronimus said that China still had a depressed market and that the travel-retail industry was still not performing as well as it once had, although that this had been offset by the company’s “continued strong momentum in emerging markets, Europe and North America.”
“In this context, I am particularly pleased to see the acceleration of L’Oréal Luxe, the dynamism of Consumer Products and the continued share gains of Dermatological Beauty and Professional Products,” he stated.
He concluded by drawing attention to an "environment that continues to be marked by economic and geopolitical tensions" but said that the business remained “optimistic about the outlook for the beauty market and confident that our innovation power and the robustness of our multi-polar model will allow us to keep outperforming it and to achieve another year of growth in sales and profit.”
