L’Oréal Luxe accelerates in second half as Group revenue reaches €27.9bn

By Luke Barras-hill |

L’Oréal Luxe returned to growth in the last quarter as full-year sales reached €10.17bn.

L’Oréal Luxe brands gathered pace in the second half of 2020 with ‘solid’ positions maintained in global travel retail.

The beauty giant has reported its financial results for the 12 months ending 31 December 2020, with like-for-like sales down 4.1% (-6.3% reported) to €27,992.1 million.

Amid an extremely tough operating environment, Luxe returned to growth in the last quarter of 2020 with year-end sales down 8.1% to €10,179.9m.

MARKET SHARE GAINS

The division earned market share in almost all geographic territories, particularly in Asia Pacific and China, as travel retail fortified its position.

Performances from Lancôme, Kiehl’s and Helena Rubinstein in the skincare segment alongside My Way by Giorgio Armani, Voce Viva by Valentino and Libre by Yves Saint Laurent helped the division ‘outperform’ the market, according to L’Oréal. However, the makeup segment remains challenged.

Source: L’Oréal Group. Click to enlarge.

Operating profit reached €5,209m (-6.1%), taking an 18.6% slice of Group sales.

Registering €11,703.8m, Consumer Products (-4.7%) accounted for the largest share of revenue, revealed the Group’s results.

The division restored its equilibrium in the second half of the year, driven by Garnier and L’Oréal Paris fuelled by ‘Back to Beauty’ initiatives carried out in partnership with retailers, plus media investments.

By region, Western Europe (-10.3%) and North America (-7.4%) suffered growth snags due to the range of public health measures in place although as mentioned L’Oréal managed to grow its market share in many countries, particularly China.

New Markets, which include Asia Pacific; Latin America; Eastern Europe; and Africa and Middle East grew by 1.5% on a like-for-like basis to €13,574.7m.

Jean-Paul Agon, Chairman and CEO of L’Oréal Group commented: “In 2020, the Covid-19 pandemic, which spread across the world, triggered a crisis of supply due to the widespread closure of points of sale which led to an unprecedented, if temporary, decline of the beauty market.

Source: L’Oréal Group. Click to enlarge.

“Throughout the year, L’Oréal made the protection of all its employees as well as its customers and suppliers an absolute priority and mobilised to produce millions of units of hand sanitiser and hand cream for donation to healthcare and other frontline workers.

“Thanks to the outstanding commitment of its employees, L’Oréal has traversed this crisis in the best possible condition and has even grown stronger. As anticipated and announced, the Group returned to growth in the second half, with a fourth quarter in acceleration at +4.8% and won significant market shares.”

E-commerce and digital solutions helped the beauty giant leverage stronger relationships with its customers during the period in question. This also helped to offset the closure of points of sale.

Sales from e-commerce rose by 62% across all divisions and regions to account for a record 26.6% share of total Group sales for the year.

COMMITMENT TO THE CIRCULAR ECONOMY

Elsewhere, L’Oréal was recognised by the CDP as a global leader in sustainable development through the beauty firm’s actions in fighting climate change, protecting forests and managing water.

In 2020, it launched its L’Oréal for the Future Programme (for a detailed report on L’Oréal’s sustainability ethos, click here).

Source: L’Oréal Group. Click to enlarge.

“Driven by the strength of its strategic choices and a determined dynamic across the year, L’Oréal has adapted to this unprecedented context and terrible pandemic with speed and agility, accelerated all of its transformations and will emerge stronger,” added Agon.

“As the beginning of this new year, which remains marked by uncertainty regarding the evolution of the pandemic, but also by consumer’s appetite for beauty that remains intact across the world, we are confident in our capacity to outperform the market again this year and, subject to the evolution of the sanitary crisis, achieve a year of growth in sales and profits.”

In view of France extending its state of health emergency until June and the associated constraints on shareholders’ attendance, the AGM typically held at the Palais des Congrès in Paris is likely to take place on a restricted basis on 20 April at L’Oréal’s headquarters, 41 rue Martre, Clichy.

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