French beauty powerhouse L’Oréal maintained strong growth momentum in the first nine months of 2023 despite the muted recovery of the Mainland China market and what it called a “reset” in Asian travel retail.
The latter was a reference to the challenges brought by tighter controls over the daigou market from Korean Customs Service and the Hainan authorities in recent months. South Korea and Hainan offshore duty free have been the two most buoyant travel retail channels through the pandemic years but heavily influenced (especially in South Korea) by the daigou sector.
The group’s net sales for the January to September period grew +9.4% on a reported basis (+12.6% like-for-like) to €30.57 billion (US$33.32 billion).
L’Oréal CEO Nicolas Hieronimus said: “I am very proud of the performance of our teams in the first nine months. The beauty market remains exceptionally dynamic, and L’Oréal continues to outperform and reinforce its global leadership.
“Despite the slower-than-expected recovery of the beauty market in Mainland China and the reset in Asian travel retail, L’Oréal kept its double-digit pace. We did so thanks to our broad-based regional footprint, our successful innovation pipeline, and our agility to rapidly allocate investment to the areas where we see the highest growth.”
The group continued to outperform the global beauty market in the third quarter, with reported net sales up by +4.5% (+11.1% like-for-like).
Across all channels, the group registered strong growth in all product categories. Its Dermatological Beauty arm saw the highest growth at +28.7% (like-for-like) and +27.3% (reported), followed by Consumer Products at +14.5% (like-for-like) and +10.8% (reported).
By region, the continued strong momentum in Europe and North America offset a decline in top market Mainland China. The group reported “exceptional growth” in Europe, up +17.6% like-for-like and +15.3% reported. The growth was broad-based across countries with sustained strength in the Germany-Austria-Switzerland and Spain-Portugal clusters, the UK, the Nordic countries as well as Eastern Europe.
Sales in North America rose by +12.6% like-for-like and +11.2% reported. The company noted that growth was broad-based across all divisions, boosted by the successful, valorising innovation pipeline.
The daigou-related sales decline reflected in North Asia, which saw sales increase by just +1.3% like-for-like, and drop -4.1% on a reported basis. Despite the slow recovery in Mainland China, the company noted the “broadly stable” growth pace in this key market, growing at +7.7% like-for-like and gaining significant market share across all divisions. The return of travel demand in Hong Kong also drove the strong momentum.
In Japan, L’Oréal significantly outperformed a dynamic market, thanks to its consumer products and L’Oréal Luxe.
The SAPMENA-SSA region delivered “remarkable” performance, with sales rising sharply by +23.6% like-for-like and +15.6% reported. The company noted robust growth in the skincare, fragrance and makeup categories.
The company achieved double-digit like-for-like sales growth across the region with the Australia-New Zealand cluster, India and Thailand emerging as the top-three contributors.
Sub-Saharan Africa enjoyed outstanding growth, broad-based across all countries.
The Latin America region also contributed largely, up by +24.4% like-for-like and +27.4% reported. The beauty market remained dynamic in all countries there, with double-digit sales increase. Mexico and Brazil led the region’s overall performance. The company highlighted strong performance in the skincare and fragrances categories.
Looking ahead, Hieronimus said: “In a context of continued economic and geopolitical uncertainty, we remain confident in our ability to keep outperforming the market and achieve in 2023 another year of growth in sales and profits. We are optimistic about the outlook for the beauty market and remain ambitious for the future.” ✈
