L’Oreal, the world’s largest cosmetics group, is hopeful for a strong recovery in makeup sales once the COVID-19 pandemic subsides. The company predicts a resurgence of socialization and dressing up, leading to an increased demand for cosmetics. This optimism was evident as L’Oreal reported higher-than-expected sales growth in the fourth quarter, outperforming a cosmetics market that was severely impacted by the pandemic. Brands such as Maybelline, Lancome, and Garnier, all owned by L’Oreal, experienced a boost in their shares.

Despite the continued closure of many hair salons and widespread lockdowns, L’Oreal maintains a positive outlook for the market. The company expects a 4.8% growth in comparable sales to persist into the first quarter. Jean-Paul Agon, the CEO and Chairman of L’Oreal, believes that sales will accelerate significantly as COVID-19 vaccines become more accessible and infection rates decline. Agon envisions a post-pandemic “fiesta” in the makeup and fragrance sectors, drawing parallels to the Roaring 20s, a time of economic boom and festive indulgence.

China provides a glimpse into this anticipated recovery, as the country experienced eased restrictions and strong sales growth for L’Oreal in 2020. The company reported a 27% increase in sales in China, further adding to their optimism.

While luxury retailers and beauty companies have faced challenges due to physical store closures, cosmetics companies have witnessed a surge in demand for skincare products and at-home pampering treatments. Furthermore, the shift towards online shopping has significantly benefited these companies. L’Oreal, in particular, experienced a remarkable 62% increase in online revenues in 2020, constituting over a quarter of their total sales. China reported a similar trend with a 56% growth in online sales during the same period.

In the last quarter of 2020, L’Oreal achieved total sales of 7.88 billion euros ($9.5 billion), remaining stable compared to the previous year on a reported basis. However, on a like-for-like basis, excluding currency effects and acquisitions, there was a 4.8% increase. This surpasses expectations and reflects the company’s resilience amidst challenging circumstances.

L’Oreal anticipates that the pandemic will have a lasting impact on consumer behavior. Nicolas Hieronimus, L’Oreal’s deputy CEO, who is set to replace Agon in May, believes that the shift to online shopping, driven by the pandemic, is here to stay. The company foresees that 50% of its future sales will be generated online; however, a specific timeline for this transition was not provided. Hieronimus also acknowledges that the pandemic has heightened consumers’ focus on environmental issues and their preference for socially responsible companies. Health-consciousness and the recognition of science and research as solutions to global problems have also become more prominent. As the future CEO, Hieronimus plans to prioritize skincare products and elevate the role of research and development in the company to respond to these emerging trends.

Sources:
1. L’Oreal: https://www.loreal-finance.com/en/annual-results
2. COVID-19 pandemic impact on cosmetics market: https://www.aljazeera.com/economy/2021/2/11/loreal-ceo-predicts-roaring-twenties-for-makeup-sales-after-pandemic