L’Oréal beauty sales rise +9.3% to $7.44bn

By Doug Newhouse |

Strong growth in Consumer Products and Luxury Products, a good performance in North America and continuing dynamism in new markets drove first quarter sales at L’Oréal up 9.3% to E.5.16bn ($7.44bn). The group also reported continuing dynamism in travel retail for its Luxury Products Division.

Commenting on the figures, Jean-Paul Agon, Chairman and Ceo of L’Oréal, said: “The start to this year is encouraging, as it confirms the group’s good dynamics, to which all divisions are contributing, particularly Consumer Products and Luxury Products, driven by the vitality of their major brands: L’Oréal Paris and Maybelline on the one hand, and Lancôme, Giorgio Armani and Kiehl’s, on the other. 

“In geographic terms, North America is accelerating strongly. Growth continues to be robust in the New Markets, particularly in Latin America, in Asia excluding Japan, and in Africa, Middle East. However, the situation remains more contrasting across Europe. 

GOOD BALANCES…
“These performances reflect the quality of our innovations, the force and diversity of the brand portfolio, and the right balance in our geographic positions. 

“Although it is not possible to extrapolate from these figures, and despite an uncertain exchange rate environment, the first months of the year give us confidence in our ability to outperform the market in 2011, strengthen our worldwide positions, and achieve another year of growth in both sales and profits.” 

Sales in the Professional Products Division posted growth of +3.1% on a like-for-like basis, which was faster than the market trend, and by +9.6% based on reported figures (after taking into account the impact of currency fluctuations and of changes in consolidation due to the acquisition of distributors in the United States). 

Sales in the Consumer Products Division rose by +6.3% and L’Oréal says this division is continuing to advance strongly in North America and in new markets.

LUXURY PRODUCTS DIVISION +7.7%
Meanwhile, the Luxury Products Division recorded growth of +7.7% like-for-like and +10.3% based on reported figures. The division’s sell-out accelerated significantly in the United States, and remained ‘very dynamic’ in new markets.

Describing the progress, L’Oréal said: “Lancôme is continuing to score successes in skincare with Génifique and Absolue; the brand is accelerating in make-up thanks to Teint Miracle and the Color Design eye shadow range.

“Yves Saint Laurent remains dynamic in sell-out terms, particularly in men’s fragrances, and its sales should gradually build up throughout the year in view of its launch phasing. Giorgio Armani continued its breakthrough in women’s fragrances with Acqua di Gioia, and is bolstering its leadership in men’s fragrances with Acqua di Giò and Armani Code, which will be strengthened as of April with the launch of Armani Code Sport. 

“The strategic launch of the skincare line Régénessence is confirming Giorgio Armani’s expansion in all beauty fields.

“Kiehl’s is continuing its global expansion at a very dynamic rate in all zones, thanks to its facial skincare lines. Lastly, Biotherm is hitting the headlines with its anti-fatigue line Skin’Ergetic, a major innovation in fresh cosmetics.

SEVERAL BRANDS SHINE
“In Western Europe, the division’s sales were boosted by Yves Saint Laurent and Kiehl’s, which is improving its geographical presence. In a dynamic North American market, sales trends are extremely favourable, thanks to Lancôme, Giorgio Armani and Ralph Lauren, as well as the success of Kiehl’s.

“In the new markets, the division’s strong growth is continuing, particularly in China, Hong Kong and South Korea. Lancôme, Shu Uemura, Kiehl’s – which has just been launched in India – and Helena Rubinstein are driving the division’s growth in Asia. 

“Sales are also rising substantially in Latin America, Russia and the Middle East.” 

L’Oréal added that like-for-like sales in the Active Cosmetics Division also grew by +4.9% in the first quarter, ‘thanks to the dynamism of the new markets, particularly Latin America’.

SALES BY REGION
L’Oréal said that in a largely flat European market, the group achieved growth of +0.5% like-for-like, and +1.5% based on reported figures, thanks in particular to the UK, Northern Europe, and continued dynamism in travel retail. But it added that trading conditions are more uncertain in some South European countries.

North America: In the first quarter, North America achieved growth of +7.2% like-for-like and +11.9% based on reported figures. All divisions recorded positive growth. The Luxury Products Division made a good start to the year, with in particular a rebound at Lancôme, while the Consumer Products Division is said to be making clear market share gains in all categories.

New Markets: With growth of +11.6% like-for-like and +17.2% based on reported figures, the group said it is continuing to strengthen its positioning in new markets. Excluding Japan, it said like-for-like sales in the New Markets zone were recorded at +13%.

Asia Pacific: The group recorded growth of +11.7% like-for-like and +18.8% based on reported figures. In Japan, the company said that the devastating earthquake that hit the northeast and eastern part of the country rallied L’Oréal’s teams, who ‘demonstrated great solidarity’. The company said that no L’Oréal employees were directly affected, and no facilities damaged. 

The company said that the sales trend was at -5.9% like-for-like (+5.0% based on reported figures) at end-March, but it is too early to evaluate the impact on the full year. Excluding Japan, the growth rate was +14.7%, with good performances continuing not only in China, Hong Kong, Taiwan and South Korea, but also in the ASEAN countries and India.

[It should be mentioned here that L’Oréal made a very generous donation of Y.100m ($1.2m) to the Japan Red Cross Society to help victims and families of the earthquake in the Tohoku area of Japan-Ed].

Eastern Europe: Sales in Eastern Europe recorded a like-for-like decrease of -1.5%, although the company says this was based on a strong comparison base and with launch phasing focused more on the coming months. It added that there is also a contrast in results between Ukraine and Russia on the one hand, and the countries of Central Europe on the other which are more difficult trading areas.

Latin America: L’Oréal reports that it had a good start to the year in Latin America, with like-for-like sales growing by +24.1% and by +31.5% based on reported figures. The company said ‘growth is strong in all countries’, particularly in Brazil and Argentina. It added: “The four divisions are continuing to prove very dynamic, although the comparison base had taken an impact from the effects of the earthquake in Chile”.

Africa/Middle East: In this region L’Oréal pointed to a like-for-like sales increase of +16.0%, with strong growth in South Africa, boosted by ‘favourable commercial phasing’. The company pointed to Turkey as ‘extremely dynamic’, while events in North Africa and the Middle East have had only a limited impact on growth in this zone so far. 

OTHER HIGHLIGHTS:
Other highlights in the first quarter included like-for-like sales of +0.8% for The Body Shop, with retail sales +0.9%, but also encouraging growth rates in the New Markets, particularly in the Middle East, Eastern Europe and Southern Asia.

The company said: “The brand is also making great strides forward in e-commerce and in Travel Retail, where its visibility is increasing. On the other hand, the brand is feeling the impact of an environment seriously affected by natural disasters in Japan and Australia.”

Another important event in the first quarter was the completion on February 25, 2011 of the cash offer for the acquisition of Q-Med launched on January 3, 2011. Q-Med is the leader in developing and commercialising medical device products based on hyaluronic acid, which includes the facial dermal filler Restylane and Macrolane for body contouring. 

OFFICIAL HANDOVER
Equally significant was the Board Meeting on February 10 where Sir Lindsay Owen-Jones informed the Board of Directors that he wished to complete the transfer of his responsibilities to his successor before his 65th birthday – as planned from the outset and announced at the Augmenting in 2005. 

The Board voted unanimously in favour of appointing Jean-Paul Agon as Chairman and Ceo of L’Oréal and this appointment became effective from March 17, 2011.

 

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