Fashion
L’Oréal has released its nine-months sales results pointing to strengthened growth in the North American Consumer Products Division; maintained growth in Western Europe; a temporary third quarter slowdown for L’Oréal Luxe in Asia; strong e-commerce sales (projected at +€1bn in 2015); a slowdown in travel retail; and ‘significant’ sales and profit growth.
Commenting on the figures – including the top line €18.76bn ($20.4bn) in total 9-month sales – Jean-Paul Agon, Chairman and CEO of L’Oréal, said: “At the end of September, the Group’s reported growth is strong, at +13.2%, still supported by a very positive currency effect.
“In the third quarter, the Consumer Products Division is confirming the gradual strengthening of its growth, notably through strong momentum in make-up with its three brands: Maybelline, L’Oréal Paris and NYX. The Active Cosmetics Division continues to forge ahead and the Professional Products Division keeps outperforming a lacklustre market.
“L’Oréal Luxe experienced a temporary slowdown as a result of market turbulence over the summer in Asia, in Hong Kong and in Travel Retail. By geographic zone, North America’s growth is gradually increasing and Western Europe confirms its positive trend. In the third quarter, the New Markets have been hampered by the difficult Brazilian market, market turbulence in Asia and the taking over of agents’ contracts in the Middle East. In China, sales growth is in line with earlier quarters.”
Agon, added that ‘despite a global context that is still volatile’ the company remains confident for the year as a whole. He said: “The beauty market remains dynamic. In each Division, our brands are pushing forward with successes such as Maybelline and NYX in the Consumer Products Division, Yves Saint Laurent, Kiehl’s and Urban Decay at L’Oréal Luxe, Redken in the Professional Products Division and La Roche-Posay at Active Cosmetics.
“Finally, the acceleration of our digital transformation is making us stronger, in particular with the rapid increase (+40%) of our e-commerce sales which should significantly exceed one billion euros this year. We are confirming our ambition to outperform once again the beauty market in 2015 and to achieve significant growth in both sales and profits.”
Looking at the first nine-months sales to September 30, the company said that on a like-for-like basis and based on a comparable structure and identical exchange rates, sales growth of the L’Oréal group would have been +3.7%. It adds that the net impact of changes in scope of consolidation was +1.2%, while growth at constant exchange rates registered +4.9%.
The company said that currency fluctuations actually had a positive impact of +8.3% and if September-end exchange rates (€1 at $1.12) are extrapolated up to December 31, then the impact of currency fluctuations would be +6.7% for the whole of 2015.
Turning to the product divisions, L’Oréal said that at the end of September, the Professional Products Division posted growth of +3.2% like-for-like and +13.4% based on reported figures.
The company said: “Hair care is the largest contributor to growth, powerfully driven by the latest innovations, such as Thérapiste by Kérastase, Pro Fiber by L’Oréal Professionnel, and Frizz Dismiss by Redken. The dynamic trend in hair colour is continuing across all brands.
“Professional skincare with Carita is expanding rapidly in Western Europe. All the geographic Zones are growing. Eastern Europe is accelerating, while Brazil is slowing the growth rate in Latin America.”
L’Oréal Consumer Division
As for the Consumer Products division, the beauty giant recorded a rise of +2.3% like-for-like and +11.2% based on reported figures. The company commented that gradual improvement growth trend continues and thanks to the new momentum of Maybelline, the strong expansion of NYX, and the success of L’Oréal Paris, this division is strengthening its leadership in the make-up market.
L’Oréal also notes that hair care is winning market share, thanks notably to L’Oréal Paris. For Garnier, the Ultimate Blends’ successful launch process has continued in many European countries. At the same time, the division is outperforming the markets in Eastern Europe, Asia, Pacific, Africa and the Middle East, while the ‘strong make-up dynamic’ is said to be accelerating the division’s growth in the US, while e-commerce is growing fast across all Zones.
Meanwhile, L’Oréal Luxe posted growth of +5.8% like-for-like and +17.9% based on reported figures. Within the more detailed picture, Yves Saint Laurent grew strongly, driven by make-up, men’s fragrances with L’Homme and women’s fragrances with Black Opium. L’Oréal added that Giorgio Armani remained dynamic across all geographic Zones.
The company added: “Urban Decay is accelerating worldwide with the high-profile launch of the Naked Smoky palette and is building a global beauty offering with initiatives in foundations and lipstick. Kiehl’s is launching Daily Reviving Oil Concentrate and continuing its double-digit growth.
“Growth at Lancôme is being driven by market share gains in Europe, the success of the fragrances La vie est belle, Miracle and the newly released La Nuit Trésor; Grandiôse and Hypnôse Volume à Porter mascaras; and the acceleration of its Génifique facial skincare.”
L’Oréal adds that despite a market that slowed in the third quarter in Asia and in Travel Retail, L’Oréal Luxe has strengthened its worldwide position with significant gains in Western Europe, in Asia, Pacific, in the Middle East and in Latin America.
Active Cosmetics division
The company’s Active Cosmetics division also improved its performance further with strong growth of +7.3% like-for-like and +9.7% based on reported figures. L’Oréal reported that Vichy is innovating with Neovadiol Substitutive Complex Serum, a formula that acts on skin changes linked to menopause.
At the same time, Roche-Posay is renewing its expert franchise for oily skin with the launch of Effaclar K(+). The company adds that the brand is continuing to post double-digit growth in all geographic Zones, with ‘outstanding performances’ in France, Brazil and China. The successful international roll-out of SkinCeuticals is continuing.
The beauty company also reported that all geographic zones continue to contribute to growth, with sales accelerating in the third quarter and new markets maintaining growth at more than 10%.
Western Europe recorded growth of +2.1% like-for-like and +4.5% based on reported figures, with L’Oréal Luxe is continuing to act as a growth driver. Garnier is also said to be winning market share in hair care and skincare, while L’Oréal is continuing to outperform the market in Germany and the UK thanks to L’Oréal Luxe.
In North America L’Oréal posted growth of +3.0% like-for-like and +25.4% based on reported figures. Both the Active Cosmetics and Professional Products Divisions drove growth and notably thanks to the La Roche-Posay and Redken brands.
Kiehl’s and Urban Decay also contributed to the development of L’Oréal Luxe, while the Consumer Products Division also grew with good make-up contributions from L’Oréal Paris, Maybelline and above all NYX, which is described as ‘growing at a remarkable pace’. Meanwhile, the Body Shop recorded growth of +2.0% like-for-like and +12.6% based on reported figures.
Commenting on other markets, the company reported a mixed picture, beginning with the Asia and Pacific territories: “At the end of September, L’Oréal posted growth of +4.4% like-for-like and +21.9% based on reported figures. Kiehl’s, Yves Saint Laurent and Giorgio Armani are contributing to the dynamism of L’Oréal Luxe, in a context of slower third-quarter growth in Hong Kong and Travel Retail Asia.
“The Consumer Products Division is performing well in India, Australia and Thailand. In China, growth at L’Oréal Paris is accelerating, while Magic is undergoing a transitional period. The Active Cosmetics Division is growing strongly, thanks to the success of La Roche-Posay.”
Tough Brazilian market
By contrast, in Latin America sales grew by +5.5% like-for-like and by +4.7% based on reported figures. Excluding Brazil, sales achieved double-digit growth, thanks to L’Oréal Paris, Maybelline and Lancôme, although the company says that the Brazilian market is being held back by a very difficult economic environment and by the reform of the IPI (Tax on Industrialised Products).
Looking at Eastern Europe, L’Oréal said that the zone posted figures of +9.5% like-for-like and -4.1% based on reported figures. The Consumer Products and Professional Products Divisions recorded double-digit growth, boosted by Russia, Turkey and Ukraine.
As for Africa and the Middle East, sales growth amounted to +9.8% like-for-like and +28.1% based on reported figures. L’Oréal said: “The reorganisation of part of our distribution network in the Gulf States caused a temporary growth slowdown in the third quarter. The Group is strengthening its positions at a time when most markets in the Zone are seeing their growth rates decelerate.
“Egypt and Saudi Arabia are still posting strong performances. L’Oréal Paris and Garnier are gaining market share. Yves Saint Laurent, Giorgio Armani, Kérastase and La Roche-Posay are also recording solid growth rates.”
