L’Oreal benefits as people start wearing makeup again

L’Oreal’s main cosmetics business exceeded pre-pandemic sales levels and the inflation that has markets worried doesn’t seem to be affecting the Maybelline maker as consumers wear makeup and perfume again.

The shares rose as much as 6.8% Friday after the company reported adjusted sales growth of 13% in the third quarter, surging past analysts’ expectations. 

L’Oreal has recovered from the pandemic quickly thanks to its diverse product offering. When consumers were locked down, the drop in demand for makeup was partly offset by increased interest in creams made by La Roche-Posay or CeraVe that were recommended by dermatologists on social media platforms. Strong US demand made North America the fastest-growing market, while Chinese sales were 43% higher than in the 2019 period.

“Great companies don’t seem to be bothered by a few more lockdowns or a few more supply chain issues,” said Bruno Monteyne, an analyst at Sanford C Bernstein. “The good news is that the growth is broad-based regionally and divisionally.”

A global vaccination drive means virus restrictions have eased with consumers now able to celebrate weddings and birthdays and eat out. Mandatory mask wearing outdoors in France, for instance, is no longer required, which is driving sales of lipsticks and foundations.

CEO Nicolas Hieronimus said fundamentals for the Chinese market are “extremely positive”.

Its active cosmetics unit, which includes brands such as CeraVe and SkinCeuticals, was the top performer with 28% growth during the period. The consumer-products unit, which includes brands such as Maybelline New York that sell lipsticks and mascaras as well as haircare, exceeded its performance in the same period in 2019. 

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