L’Oréal mentioned it’s going to embark on an “aggressive plan of new product launches” and promoting campaigns within the coming months to spur folks to begin shopping for cosmetics once more, regardless of the continuing coronavirus pandemic.
Jean-Paul Agon, the longtime chief government of the world’s largest magnificence firm, acknowledged that the worldwide well being disaster was “unfortunately not over” however expressed confidence that L’Oréal might thrive, with the group’s booming e-commerce operation serving to to offset reluctance by some clients to go to retailers.
“We want to go on the offensive again,” he informed the Financial Times. New luxurious perfumes from Giorgio Armani and Valentino and a new strong shampoo from Garnier had been being readied for launch he mentioned, as L’Oréal returned to initiatives beforehand paused due to Covid-19.
The pledge got here as L’Oréal delivered weaker-than-expected gross sales within the second quarter after lockdowns compelled specialist magnificence retailers in addition to hair and nail salons to shut. The solely vibrant spot was China, the group’s second-biggest market after the US, the place gross sales rose 30 per cent within the three months to June.
Overall group second-quarter gross sales had been €5.85bn, down 19 per cent on a like-for-like foundation and in contrast to the identical interval a 12 months earlier. Analysts had been anticipating like-for-like gross sales to fall 13.1-15.1 per cent, in accordance to Refinitiv knowledge.
But L’Oréal was nonetheless ready to promote its mass-market cosmetics and haircare merchandise by supermarkets and pharmacies, which remained open, and in addition offset a few of the ache by way of its fast-growing digital arm.
Online gross sales by itself web sites and people of outlets it sells by rose by 67 per cent within the first half and now account for 25 per cent of group income.
Mr Agon predicted that the group would come out of the disaster with e-commerce accounting for as a lot as 30 per cent of gross sales and that there could be no regression to pre-pandemic ranges. “This has been a tipping point for many consumers as many discovered buying online for first time,” he mentioned.
In international locations the place shops have reopened, corresponding to China and the US, on-line gross sales are nonetheless rising quickly he added. “It is unbelievable, this has been the biggest phenomenon for us in the past six months.”
The firm behind make-up manufacturers together with Lancôme and Maybelline managed to restrict the hit to profitability within the first half of the 12 months by chopping prices on every little thing from journey to hiring. It delivered a first-half working margin of 18 per cent in contrast to 19.5 per cent in the identical interval a 12 months in the past.
However first-half working revenue fell 18.4 per cent to €2.36bn, barely decrease than the €2.44bn anticipated by analysts.
“It’s been a long time since we saw quite so much red from L’Oréal,” RBC analyst James Edwardes Jones wrote in a word.
It might fall to Mr Agon’s successor to pilot the corporate by the post-pandemic restoration. The board has begun an inner search to exchange the CEO who has been on the helm since 2006 and are anticipated to announce their choice within the autumn. The new candidate would doubtless begin in 2021.
Asked whether or not he would love to keep on as chairman Mr Agon mentioned it was up to the board to determine. “If they do ask me, I would do so with pleasure and it would be an honour,” he mentioned.