“Extremely dynamic” travel retail sales growth boosts L’Oréal’s first quarter performance

L’Oréal Travel Retail posted 24.1% like-for-like sales growth for the first quarter of 2019 (based on a comparable scope of consolidation and constant exchange rates).

That growth easily outpaced the company’s overall like-for-like performance of 7.7% (8.9% at constant exchange rates and 11.4% based on reported figures), to reach €7.55 billion.

L’Oréal Chairman and CEO Jean-Paul Agon noted that the travel retail channel was “extremely dynamic” and remained one of the company’s most “powerful underlying growth drivers”. He commented: “Travel retail, which surpassed the €2 billion mark in 2018, continues to grow very fast.”

L’Oréal Chairman and CEO Jean-Paul Agon: “In the first quarter of 2019, L’Oréal maintains the rhythm set in the last quarter of 2018, with strong sales growth.”

Agon also said the company’s L’Oréal Luxe and Active Cosmetics divisions showed “dynamic growth”. Travel retail was a key driver of L’Oréal Luxe sales growth.

Agon commented: “L’Oréal Luxe has performed remarkably well in a particularly buoyant market, led by its four major brands, Lancôme, Yves Saint Laurent, Giorgio Armani and Kiehl’s, all of which posted more than 15% growth, and by very strong development in Asia.

“The Active Cosmetics division is exceptionally dynamic, growing in every region of the world, and growth in the Consumer Products division is gradually improving. The Professional Products division is making headway in a market that remains challenging.”

L’Oréal’s ecommerce sales grew by 43.7%, and online retail is now “a powerful growth driver for every division and all regions of the world”, according to Agon.

Looking ahead, Agon concluded: “Despite a volatile, uncertain and contrasted economic environment, this positive start to the year gives us confidence in our capacity to outperform the market in 2019 and see another year of growth in sales and profits.”

Sales by operational division and geographic region in the first quarter of 2018.
Click on image to enlarge.

Results by region

Western Europe saw sales growth of 1.1% on a like-for-like basis, and 2.1% based on reported figures. L’Oréal noted a “largely lacklustre” market, particularly in the UK. Consumer Products was back to growth, with L’Oréal Luxe also making progress thanks to strong momentum in the Giorgio Armani and Kiehl’s brands. Active Cosmetics made a positive start to the year, while Professional Products has been impacted by a slowdown in France.

North America recorded growth of 1.2% like-for-like and 9.2% based on reported figures, with contrasted results across the region. Professional Products reported improved growth, while Active Cosmetics continued to perform strongly. Despite the slowdown in the luxury market, L’Oréal Luxe was up slightly, with good scores in the fragrance segment, where Yves Saint Laurent and Giorgio Armani are outperforming the market. The mass market is being held back by the makeup category, L’Oréal said.

In Asia Pacific, growth was 23.2% like-for-like and 30.4% based on reported figures. All divisions reported strong growth, particularly L’Oréal Luxe and Active Cosmetics. “L’Oréal continues to strengthen its position in a Chinese market that remains very buoyant,” the company said. “Growth is also strong in a number of other markets, notably India, Indonesia, Malaysia and the Philippines.” Yves Saint Laurent and Giorgio Armani, along with the premium skincare brands, reported the strongest growth.

L’Oréal group sales 2018/2019 (€ million). Click to enlarge.

Latin America recorded 4% like-for-like growth, with a 1% decline based on reported figures. A return to growth was seen in Brazil, L’Oréal said. L’Oréal Luxe and Active Cosmetics posted double-digit growth.

Eastern Europe grew by 7.1% on a like-for-like basis and 1.3% based on reported figures. Active Cosmetics remained dynamic, driven by La Roche-Posay. In terms of countries, Russia, Czech Republic, Ukraine and Romania saw good growth.

In Africa and the Middle East, like-for-like growth was 1% (3.7% based on reported figures). Markets in the Middle East continue to be challenging, L’Oréal said, especially at L’Oréal Luxe. Morocco and Egypt are growing, as is sub-Saharan Africa.

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