Cosmetics giant L’Oréal continued its recovery in the fourth quarter of last year, having taken a significant hit to its business early in the pandemic.
Over the three month period to the end of December, revenue was flat on a year ago but up 4.8% when stripping out currency effects and acquisitions. This compares to sales plummeting 18.8% during the second quarter period of the year at the height of lockdowns around the world.
The group said its recent performance was driven by strong demand in China and booming online sales.
For the year as a whole, L’Oréal’s like-for-like sales were down 4.1% with net profit slipping 5% to €3.75bn. However, the group held operating margins steady at 18.6% by trimming marketing, research and development costs.
The group’s Europe and North America divisions recorded sales declines of 10.3% and 7.4% for the whole of 2020 as consumers stuck at home used less make-up and haircare products, whilst beauty salons were also forced to close. Both regions remained in negative territory in the fourth quarter (-5.9% and -0.1%). However, growth of 16.6% in the Asia Pacific and an 11.9% increase in Latin America supported the wider group’s recovery.
Towards the end of last year, L’Oréal confirmed that current deputy Chief Executive Nicolas Hieronimus will replace its long-serving boss Jean-Paul Agon in May.
The company has responded to the pandemic by closing some of its stores and shifting investment to online activities. E-commerce, which includes sales on L’Oréal’s own websites as well as those of its partner retailers, rose by 62% last year to account for more than one-quarter of group sales, up from 15.6% of sales in 2019.
L’Oréal did not provide specific financial guidance for 2021 but Agon said: “As the beginning of this new year, which remains marked by uncertainty regarding the evolution of the pandemic, but also by consumer’s appetite for beauty that remains intact across the world, we are confident in our capacity to outperform the market again this year and, subject to the evolution of the sanitary crisis, achieve a year of growth in sales and profits.”
