Cosmetics
“We want new stuff to get customers excited:” L’Oréal CEO on Q3 gross sales outcomes
Oct
L’Oréal Group reported that its gross sales had risen by 3.4% on a like-for-like foundation for the third quarter of 2024 (1 July – 30 September) reaching €10,28bn – but this was decrease than what had been anticipated for the cosmetics agency.
Gross sales down in derma division
Gross sales within the North Asia area, which primarily consists of China, had declined by 6.5% for the third quarter, dropping from a decline of two.4% within the second quarter of this 12 months.
This area has beforehand accounted for round 1 / 4 of all gross sales for the group, however post-Covid, client spending has dropped because of excessive unemployment and a property disaster in China.
Final week when LVMH – one other French luxurious enterprise – shared its monetary outcomes for a similar quarter, it additionally mentioned that client confidence in China was at an all-time low.
In a convention name in regards to the third-quarter outcomes, CEO Nicolas Hieronimus famous that the corporate was nonetheless outperforming a “very adverse market,” however that this was “not ok.”
“The much less anticipated, or ought to I say worse than anticipated, turbulences had been in North Asia,” he mentioned.
“Within the Chinese language ecosystem the place markets turned much more adverse, notably in luxurious, each within the home and in journey retail the place site visitors didn’t convert into purchases.”
“We had been inspired lately by the federal government’s stimulus measures and hope that they are going to lead to a gradual pickup in client confidence,” he continued.
Gross sales down in derma division
Hieronimus additionally famous the shocking drop in gross sales for its Dermatological Magnificence division, because it confronted a lowered demand for solar care and derma skincare merchandise. This had been the fastest-growing division, however had slowed to 0.8%, in contrast with 10.8% within the second quarter.
“What was additionally surprising was this summer season turbulent climate, which led to little replenishment and subsequently adverse promoting in LDB (dermatological division),” he acknowledged.
“We have to convey new stuff to get customers excited,” Hieronimus mentioned, noting that the most important slowdown for the division was within the US market as a result of there had been few improvements.
“Younger Gen Zs wish to strive different manufacturers. It is as much as us to recruit them,” he acknowledged.
Within the third quarter of 2024, the corporate additionally has additionally skilled slower progress in rising markets outdoors China.
Gross sales progress in Europe, which accounts for one-third of all gross sales and is subsequently L’Oréal’s greatest area, slowed on this quarter.
The North American area fared higher after experiencing drops within the earlier quarters, with gross sales up by 5.2%. In response to Hieronimus, this was helped by a hair care and perfume increase.
General he was not involved about these areas, stating that “underlying progress tendencies stay strong in Europe and North America in addition to in rising markets” and dubbing any drops “a summer season slowdown.”
“Globally, magnificence items are rising, together with in China, demonstrating the resilience and potential of the sweetness class,” he mentioned. “The contribution from worth and quantity for L’Oréal was nicely balanced, illustrating our capability to each valorise and recruit.”
The perfume and hair care classes had been nonetheless robust factors for the Group and he mentioned that “make-up is pursuing its gradual restoration, fuelled by new product launches that had been sadly fairly backloaded this 12 months.”
Going ahead, Hieronimus mentioned that the vacation season is now approaching, “the place our energy in fragrances will play in our favour” however he mentioned that regardless of this, “we do not see any change within the macro panorama and This autumn is when China weighs probably the most in our turnover – notably with the large W11 (the Single’s Day gross sales).”
Hieronimus mentioned that L’Oréal now goals to extend the variety of launches subsequent 12 months “because it now not advantages from the tailwinds of resurgent demand after the pandemic and inflation.”
“All in all, we stay assured to outperform the market this 12 months once more and ship progress in gross sales and working income,” he concluded.