L’Oréal sees post-pandemic ‘roaring 20s’ for cosmetics

L'Oréal, the world's biggest cosmetics group, forecast a strong rebound in make-up sales when the Covid-19 pandemic gives way to a "roaring 20s" when people get dressed up and go out again to socialise.

Shares in L'Oréal, owner of brands such as Maybelline, Lancome and Garnier, rose on Friday after the group reported higher than expected fourth-quarter sales growth, broadly outperforming a cosmetics market hit hard by the pandemic.

The company said that with many hair salons still closed and millions of consumers in lockdown, it was cautious about prospects for the market.

It forecast, however, that the 4.8 per cent comparable sales growth seen in the past three months of 2020 would continue into the first quarter.

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L’Oréal chief executive and and chairman Jean-Paul Agon said sales would accelerate sharply as Covid-19 vaccines are distributed and levels of infection subside.

“People will be happy to go out again, to socialise,” he said at a presentation of the company’s results. “This will be like the Roaring 20s, there will be a fiesta in make-up and in fragrances,” he said, referring to the 1920s post-war economic boom, when people wore daring fashions and partied.

He said strong sales in China, where many Covid-19 restrictions have been eased, offered a sneak preview of what the rest of the world could expect. L'Oréal said its sales in China were up 27 per cent in 2020.

Online sales

L’Oréal’s online revenues jumped 62 per cent in 2020 as a whole, reaching more than a quarter of total sales.

The company reported on Thursday that total sales reached €7.88 billion in the fourth quarter flat from last year on a reported basis but up by 4.8 per cent on a like-for-like basis, excluding currency effects and acquisitions, with the numbers beating forecasts.

The company expects the pandemic will have a lasting impact on consumer behaviour. Nicolas Hieronimus, L'Oréal's deputy chief executive who will take over from Mr Agon in May, said the switch to online shopping driven by the pandemic is here to stay. The company expects that half of its future sales will be online though it did not say when that threshold would be reached.

He said Covid-19 had also made consumers more environmentally focused, because it highlighted the fragility of the ecosystem and made people keener to buy from companies that shared their values.

Other effects were a focus on health and a new recognition of the importance of science and research as a solution to the world’s biggest problems. – Reuters