Cosmetics group L’Oréal on Tuesday exceeded its first-quarter 2022 revenue growth forecast.
Dispelling fears of gridlock in China and inflation, L’Oreal is enjoying a rebound with a 13.5% increase in sales in the first quarter of 2022. Consumers have not been shy about snapping up the group’s high-end beauty products in its major markets.
“We’re not going to see a slowdown in the luxury sector anytime soon, we’re seeing a lot of affluent people and even middle class people who want to treat themselves,” explained Nicolas Hieronimus, L’Oreal’s chief executive officer, on a conference call with analysts. “The overall demand for luxury and high-end products is very high – the market is getting richer in general,” he added.
The two most profitable segments for the group are the active cosmetics division and the luxury division. The former, which includes the sale of the Vichy and CeraVe brands, was the fastest growing, with sales up 18%. Its largest division, L’Oréal Luxe, recorded growth of 17.5%.
The group’s overall sales rose 13.5% on a like-for-like basis to 9.06 billion euros in the first three months of 2022, with double-digit growth in Europe, North America and mainland China.
Analysts had expected sales growth of 10.6%, according to a consensus estimate cited by Credit Suisse. “This is a good statement overall with strong momentum behind L’Oreal’s key growth drivers,” commented RBC analysts, citing North Asia, North America and the Active Cosmetics division.
Executives prefer to remain optimistic about China (which is partially reconfiguring), noting that the local market in the country remains buoyant, thanks in part to the dynamism of Hainan.
Asked how the company is assessing risks in Russia, where it has temporarily closed stores and has 2,200 employees and a production facility, Nicolas Hieronimus says: “We are monitoring the situation extremely closely, both in terms of consumer sentiment, in terms of the sentiment of our teams, and we are taking all appropriate measures to offset any reputational risk.”
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