L’Oréal Travel Retail maintains its strong momentum with +21% growth in third quarterGlobal beauty house L’Oréal Group generated like-for-like growth of +7.5%* in the third quarter (ending September) powered, in particular, by travel retail activities which were up by +20.8%, and by ecommerce, up by an incredible +47.5%.

The French multinational achieved sales of €7.2 billion in the three months to September and said ecommerce now accounted for 13.5% of sales. The company did not divulge travel retail’s share but this has been increasing given the division’s three-times the overall company growth rate seen in the first half and continuing this quarter.

Brands in the L’Oréal Luxe portfolio are key to the travel retail channel [click to enlarge]

For the nine months to September sales rose by +7.5% to €21.99 billion driven by its New Markets geographic segment (+16.7%) and, within that, Asia Pacific which soared away at +23.9% (see chart below). By division, L’Oréal Luxe and Active Cosmetics had the best performances in the nine-months period, up +13.4% and 13.8% respectively.

Bu division L’Oréal Luxe and Active Cosmetics performed best while Asia Pacific remained the regional growth driver [Click to enlarge]

Commenting on the figures, L’Oréal CEO Jean-Paul Agon said: “L’Oréal achieved an excellent third quarter at +7.8% (like-for-like) – the highest level of growth in more than a decade – and continues to outperform the beauty market, which is still proving highly dynamic.”

Jean-Paul Agon: “Skincare, ecommerce and travel retail continue to fuel (our) performance”

He highlighted skincare, ecommerce and travel retail as “powerful growth drivers”.

Agon added: “All of the divisions are growing, especially L’Oréal Luxe and Active Cosmetics which are particularly dynamic. Performance was mixed in the Consumer Products division with strong growth in Asia on the one hand, but on the other, a context that remains difficult in the US. The Professional Products division continues to improve.

“Across geographic zones, Asia Pacific maintained its powerful momentum, particularly in China, India, Southeast Asia and Japan. Eastern Europe is accelerating and the improvement in Western Europe is ongoing.”

Performance by product segment**

PROFESSIONAL PRODUCTS – The divisions posted +3.0% growth driven by the US and Asia Pacific where it is continuing to win market share. Eastern Europe maintained its momentum, while Latin America and Western Europe are still impacted by sluggishness in some markets. Haircare was the top contributor to growth, boosted by the very strong momentum of Kérastase, which is expanding across all regions, and by the robust performance of Total Results by Matrix. Hair colour benefited from Shades EQ at Redken and delivered double-digit growth.

Impactful: Kérastase at Beirut Airport

CONSUMER PRODUCTS – Growth of +3.0% was helped by L’Oréal Paris enjoying sustained popularity and Garnier performing well. Travel retail and ecommerce were both growth drivers. Skincare accelerated across all geographic zones helped by innovations such as Revitalift Filler ampoules and serum with hyaluronic acid (L’Oréal Paris), the launch of Garnier Bio, the success of tissue masks and of Garnier Men in Southern Asia. In makeup, launches such as Rouge Signature (L’Oréal Paris) and Superstay Matte Ink (Maybelline New York) also drove sales. In haircare, L’Oréal Paris is capitalising on the global roll-out of Dream Lengths and Colour Protect Purple (both Elvive). The division is winning market share in Europe and growing rapidly in Asia, especially China, India, Korea and Indonesia thanks, in particular, to 3CE by Stylenanda. It is being held back by the flat makeup market in the US.

L’ORÉAL LUXE – The division outperformed the market with +13.4% growth, driven by Asia Pacific and travel retail, but with “very good performances in Europe and Latin America also worth noting”. The market in North America remains difficult. The division’stop four brands “are maintaining their strong rhythm”. Skincare was helped by the launches of new-formula Génifique (Lancôme) and Calendula Serum-Infused Water Cream (Kiehl’s). Helena Rubinstein accelerated in the ultra-premium skincare segment. In fragrances “an excellent start was made” by the women’s scents: Idôle (Lancôme) and Libre (Yves Saint Laurent). Sì Passione (Giorgio Armani) continued to win market share.

There has been a huge push behind the fragrance Idôle by Lancôme this year

ACTIVE COSMETICS – All zones expanded well to achieve growth of +13.8%. “The division is outperforming a dermocosmetics market that remains extremely dynamic,” said L’Oréal. La Roche-Posay had double-digit growth and “continues to accelerate sharply across all continents thanks especially to its Anthélios, Effaclar and Hyalu B5 franchises”. SkinCeuticals had a record performance with double-digit growth in all regions while CeraVe continued to grow across all zones including the US. Ranges such as Liftactiv and Minéral 89 from Vichy helped it grow, particularly in Eastern Europe and Latin America.

Performance by region**

WESTERN EUROPE – The region had a +1.7% increase, but with acceleration in 3Q19 to +3.2%, helped by the arrival of fragrances Idôle (Lancôme) and Libre (Yves Saint Laurent). Kiehl’s and Giorgio Armani also contributed to the third quarter improvement. Active Cosmetics also accelerated, driven by La Roche-Posay, while Consumer Products continues to record share gains in makeup and skincare.

Dua Lipa fronts the campaign for Libre from Yves Saint Laurent

NORTH AMERICA – The zone was down by -0.4% with the Consumer Products division impacted by its exposure to the flat makeup market. However it is posting good growth in skincare thanks to Revitalift Triple Power (L’Oréal Paris). L’Oréal Luxe was also adversely affected by makeup, but is taking advantage of a dynamic fragrance market with its Libre and Idôle launches. The Professional Products division is outperforming the market driven by the Redken and Pulp Riot hair colour brands, and by the double-digit growth of Kérastase. Active Cosmetics ended the quarter with double-digit growth, and expanded its footprint in North America.

NEW MARKETS – These include the following regions:

Asia Pacific: Stellar growth of +23.7% was led by China, as well as India, Malaysia and Indonesia. All divisions posted double-digit increases. For L’Oréal Luxe, Lancôme, Yves Saint Laurent, Kiehl’s, Giorgio Armani and Helena Rubinstein were drivers. L’Oréal Paris and 3CE by Stylenanda (whose roll-out is ongoing), are leading the pace at the Consumer Products division. Growth in Active Cosmetics is being boosted by SkinCeuticals and La Roche-Posay across the whole zone. The performance of Kérastase in China is contributing to the success of the Professional Products division in this zone.

Building awareness: A Kiehl’s Loves Hainan pop-up pulls in the crowds

Latin America: There were contrasted performances across the zone which saw an increase of +2.4%. Mexico and Chile had good growth, while Brazil and Argentina remained difficult. Garnier in the Consumer Products division, La Roche-Posay and Vichy in Active Cosmetics, and Lancôme and Kiehl’s at L’Oréal Luxe, all tapped into the dynamism of skincare across different markets.

Eastern Europe: Strong growth of +9.2% was driven by Russia, Turkey and Central Europe (Ukraine, Romania and Czech Republic). The Consumer Products division is accelerating on the back of haircare while Active Cosmetics achieved very strong growth, thanks to La Roche-Posay’s launch of Hyalu B5.

Africa, Middle East: A difficult United Arab Emirates market contributed to a -4.0% contraction, though Egypt, Morocco, Pakistan and Saudi Arabia are growing. Active Cosmetics proved dynamic thanks to Anthélios and Effaclar by La Roche-Posay.

The new Born in Roma fragrances from Valentino are hoped to be a strong sales driver in the fourth quarter

Continuing thrust going forward

Looking ahead, Agon said: “Overall, L’Oréal’s strong performance during the quarter and in the first nine months reinforces our confidence in the dynamism of the cosmetics market, despite a volatile and contrasted environment, and in our ability to outperform it to achieve another year of growth in sales and profit.”

While L’Oréal has a weak spot in the US and also Africa and the Middle East, it will be looking to turn this around and some analysts expect the company to outperform the sector this year, given the slight third quarter acceleration. The Valentino launch this month is also set to be an important sales contributor and, next year, the company should be able to put the Clarins acquisitions, Mugler and Azzaro, into play, strengthening the group’s already powerful portfolio further.

* Based on a comparable structure and identical exchange rates. All percentages are like-for-like unless stated.

** All percentages nine months to September.

[For more on L’Oréal Travel Retail’s strategic objectives and performance see our eZine 270, page 30.]