L'Oréal: News release: "First Quarter 2020 Sales"
Clichy, 16 April 2020 at 6:00 p.m.
First Quarter 2020 Sales
Sales evolution: -4.8%
1
- Sales: 7.22 billion euros
- -4.8% like-for-like 1
- -5.0% at constant exchange rates
- -4.3% based on reported figures
- Resumption of business in China, +6.4% in first
quarter 1
- Growth in e-commerce: +52.6% 2
- Active Cosmetics Division still posting double-digit
growth
- All L’Oréal teams strongly mobilised
Commenting on the figures, Mr Jean-Paul Agon,
Chairman and CEO of L'Oréal, said:
“In a situation marked by the expansion of the
Covid-19 pandemic, which first appeared in China and has spread to
the rest of the world, L’Oréal’s number one priority is to ensure
the protection of its employees. The Group has also taken a large
number of solidarity measures for its customers and partners, and
is providing support to health authorities 3.
The first quarter of 2020 has seen a decline in
the cosmetics market of around -8%. In these difficult
circumstances, L’Oréal has succeeded in outperforming the market
with sales at -4.8% like-for-like 1. The performances by Division
are contrasted. The L’Oréal Luxe and Professional Products
Divisions are the most impacted due to the closure of perfumeries,
department stores and hair salons in many countries. The Consumer
Products Division however has seen a more moderate decline, largely
because the activity in mass-market retail has been maintained.
Lastly, the Active Cosmetics Division is still posting double-digit
growth, with the pharmacy channel still open, and a portfolio of
brands that is adapted to the strong demand for health-related
products.
All geographic Zones have progressively been
impacted by the closure of sales outlets and the introduction of
lockdown measures: first of all in China from January, and then in
the rest of the world, particularly in Western Europe from the
beginning of March, and in North America from the end of March. As
for Travel Retail, it has been heavily impacted by the sharp
restrictions on travel worldwide. Note that China is already seeing
an encouraging recovery in beauty product consumption.
E-commerce, a key growth driver for the Group,
is growing at +52.6%, and now represents close to 20% of sales 2.
The current crisis has led to a strong acceleration of the digital
transformation on which L’Oréal is particularly well positioned
thanks to its strength in e-commerce and its expertise in digital
media, content and services which enrich the consumer experience.
In an environment that is evolving every day,
lockdown measures will clearly continue to have a significant
impact on the consumption of skincare and beauty products, and
consequently on our business in the second quarter. However, as the
example of China has shown, the current situation does not call
into question consumers’ strong appetite for beauty products, which
remains intact. The market should recover quickly as soon as
measures to close sales outlets are lifted.
In this context L’Oréal’s fundamentals remain
more relevant than ever. First of all, our strength rests on our
balanced business model, with our presence in all distribution
channels and all categories. In addition, the Group has already
introduced very strict measures in terms of operational discipline,
with a freeze on the worldwide headcount, a freeze on travel, a
reduction in non-essential spending, and a thorough review of
business drivers and investments. Furthermore, L’Oréal entered this
period with a robust balance sheet, a high level of shareholders’
equity, a positive net cash situation, and with very substantial
credit lines available. Finally, it is the outstanding talent and
commitment of L’Oréal teams all over the world, and the agility of
its organisation, which enable the company to adapt, country by
country, to the constantly changing situation.
We are therefore confident in our ability to
traverse this period of crisis in the best possible conditions and
to reaccelerate as soon as conditions permit in each geographic
Zone.”
First quarter 2020 sales
Like-for-like, i.e. based on a
comparable scope of consolidation and constant exchange rates, the
L’Oréal group sales were at -4.8%.The net impact of changes
in the scope of consolidation was -0.2%.Evolution
at constant exchange rates amounted to -5.0%.
Currency fluctuations had a positive impact of
+0.7%. Extrapolating from the exchange rates on 31 March 2020, i.e.
with €1 = $1.095 up to 31 December, the impact of currency
fluctuations on sales for the full year 2020 would be approximately
-1.0%.Based on reported figures, the Group’s
sales, at 31 March 2020, amounted to 7.22 billion euros, that
is -4.3%.
Sales by Division and geographic
Zone
|
Quarterly sales |
Evolution |
€ million |
1st quarter 2019 |
1st quarter 2020 |
Like-for-like |
Reported |
By Division |
|
|
|
|
Professional Products |
835.3 |
751.1 |
-10.5% |
-10.1% |
Consumer Products |
3,284.5 |
3,169.8 |
-3.6% |
-3.5% |
L’Oréal Luxe |
2,679.6 |
2,464.4 |
-9.3% |
-8.0% |
Active Cosmetics |
751.0 |
839.9 |
+13.2% |
+11.8% |
Group total |
7,550.5 |
7,225.2 |
-4.8% |
-4.3% |
By geographic Zone |
|
|
|
|
Western Europe |
2,169.0 |
1,997.7 |
-7.7% |
-7.9% |
North America |
1,895.5 |
1,847.2 |
-4.8% |
-2.5% |
New Markets, of which: |
3,486.0 |
3,380.3 |
-2.9% |
-3.0% |
- Asia Pacific |
2,398.0 |
2,337.2 |
-3.7% |
-2.5% |
- Latin America |
422.3 |
394.8 |
+0.8% |
-6.5% |
- Eastern Europe |
483.5 |
479.6 |
-1.4% |
-0.8% |
- Africa, Middle East |
182.1 |
170.7 |
-5.6% |
-6.3% |
Group total |
7,550.5 |
7,225.2 |
-4.8% |
-4.3% |
Summary by Division
PROFESSIONAL PRODUCTS
At the end of March, the Professional
Products Division is at -10.5% like-for-like and -10.1%
reported.After a good start to the year – particularly for
its biggest brand, L’Oréal Professionnel, confirming that its
transformation is paying off – the Professional Products Division
saw its growth brake sharply in March, with the progressive closure
of hair salons in many Zones, particularly in Europe and the United
States. Kérastase posted growth in the first quarter, thanks to the
launch of its new anti-hair loss range Genesis and the recovery of
business in the Asia Zone, especially in China. The brand is also
driven by the global dynamism of the Division’s e-commerce.
The historic partner of hairdressers, the Professional Products
Division is committed to them more than ever in this current
period, first by freezing the debts of small independent salons
until they resume their activity, and second by stepping up its
digital services, making its L’Oréal Access e-learning platform
available to hairdressers. Thanks to digital activation, it is
preparing and supporting hairdressers so they can resume business
in the best possible conditions.
CONSUMER PRODUCTS
After a dynamic month of January
maintaining the fourth quarter momentum, the Division posted a
first quarter at -3.6% like-for-like and -3.5%
reported.The health crisis has had a widely contrasted
impact on categories, distribution channels, regions and therefore
brands. The category most affected is makeup, resulting in a clear
temporary slowdown for Maybelline New York and NYX Professional
Makeup, after a good start to the year. Facial skincare has also
slowed, while in contrast facial cleansing, hygiene, hair care and
above all home-use hair colour are accelerating, to the benefit of
Garnier in particular in the final weeks of March in the Western
countries. The current situation is favourable to convenience store
food retail, and is rapidly accelerating the transition to
e-commerce, where the Division recorded strong growth in the first
quarter. The Division has set itself three major priorities to
combat the effects of the crisis and emerge from it stronger than
before. First of all, the maximisation of e-commerce opportunities
thanks to L’Oréal’s unique expertise in China and acceleration
plans in place all over the world. Secondly, the adaptation of
communication plans in the light of this new reality, by drawing on
our digital leadership. The strength of our brands on social media
enables us to adapt our content in real time, and to remain in
close touch with our consumers while keeping costs under control.
Thirdly, the strengthening of our action plans in categories where
demand is accelerating and worldwide mobilisation to ensure the
availability of our products.
L’ORÉAL LUXE
L’Oréal Luxe ended the quarter at -9.3%
like-for-like and -8.0% reported, but was above the worldwide
luxury beauty market, estimated at around -16%.After a
highly dynamic start across all geographic Zones, the Covid-19
crisis led to the closure of most brick-and-mortar and airport
sales outlets in all of our major markets: Northern Asia and Travel
Retail from February, and North America and Western Europe from
March. This part of our business is therefore down sharply, while
e-commerce on the other hand remains very buoyant, up by +57% 2
worldwide. The category most affected by the crisis is makeup,
while skincare and fragrances are proving more resilient,
reflecting consumer demand for products linked to well-being and
personal care. As a result, our big brands with a large proportion
of skincare, such as Kiehl’s, Lancôme and Helena Rubinstein, are
significantly outperforming the market. Our 2019 fragrance launches
have maintained momentum, alongside our historic pillars, and have
enabled our couture brands – Giorgio Armani, Yves Saint Laurent and
Ralph Lauren – to resist well.In the first quarter, the
Division adapted very quickly to these new market conditions by
reshaping and reallocating its business drivers across its digital
ecosystem. It is counting in the short term on its strength in
e-commerce across all Zones and on its leadership in China, where
there are clear and encouraging signs of a recovery in consumption.
As soon as conditions permit, it will be ready to grow once again,
with a sustained and concentrated plan of major global launches in
the second half of the year across the whole portfolio.
ACTIVE COSMETICS
Despite the health crisis that hit Asia
and is spreading in Europe, the Active Cosmetics Division has
performed very well, at +13.2% like-for-like and +11.8%
reported.Some two-thirds of the Division’s sales are
through pharmacies and drugstores. These channels, whose main
priority is to supply medicine, have remained open since the
beginning of the crisis. This means that our major dermatological
brands, particularly CeraVe and La Roche-Posay, are well positioned
to meet consumer expectations for hygiene and daily skincare
products.The Division is growing in all geographic Zones. In Asia,
double-digit growth is driven in particular by China, Japan and
Australia. China has maintained a robust growth curve, despite the
closure of department stores, thanks to the digital activation of
our brands and the outperformance of e-commerce, the Division’s
number one distribution channel. The great success of SkinCeuticals
is confirmed. North America also remained extremely dynamic before
the epidemic began, with double-digit growth rates for the
SkinCeuticals and CeraVe brands. Western Europe, which has posted
slight growth, has been impacted since March by the lower footfall
in sales outlets, particularly in large urban pharmacies. The
Division has taken initiatives to accelerate the expansion of
e-commerce.The La Roche-Posay brand has been at the forefront of
producing hand sanitiser gel and making it available to health
professionals, hospitals, residential care homes for the elderly,
and partner pharmacies.
Summary by geographic Zone
WESTERN EUROPE
In the first quarter the Western Europe Zone saw
its sales decline by -7.7% like-for-like and by -7.9%
reported.Business was impacted by lockdown measures, and by the
closure of hair salons and perfumeries in almost all countries in
the Zone in March. Italy in particular has been adversely affected,
and over recent weeks Spain and the United Kingdom. The
Scandinavian countries, the Netherlands and Germany have been more
resilient. L’Oréal Luxe and the Professional Products Division in
particular have been affected by the closure of sales outlets. The
Consumer Products Division has been held back in makeup, but
sell-out has accelerated in recent weeks in the haircare category
and particularly in home-use hair colour. The Active Cosmetics
Division has grown, thanks to the dynamism of La Roche-Posay and
the strong acceleration of CeraVe.The significant weight of
e-commerce in Northern Europe and the United Kingdom has limited
the impact of the closure of sales outlets. In this channel,
L’Oréal can take advantage of the powerful reputation of its brands
and from the investment made in digital over the last few years.
The Southern countries are however benefiting less, due to the
lower penetration of e-commerce and the saturation of our clients’
logistic capacities.To make the most of the rebound as soon as it
happens, each country has drawn up a dynamic commercial plan, with
logistic capacities that will ensure good levels of service to our
clients.
NORTH AMERICA
The North America Zone is at -4.8% like-for-like
and -2.5% reported. Despite a good start to the year, business
slowed sharply towards the end of March.Selective and professional
distribution are the sectors most affected by the closure of many
sales outlets. L’Oréal Luxe is mobilising all its resources to
accelerate online sales both on its own brand websites and on its
partners’ e-commerce websites. The Professional Products Division
has launched a solidarity plan for hairdressers, has taken
initiatives to modernise and digitalise its training, and is
mobilising all its brands’ social media to enable interaction with
hairdressers. The SalonCentric e-commerce platform also enables
independent hairdressers to obtain supplies and continue their
activities. Most mass-market retail outlets remain open. The
Consumer Products Division is therefore adapting its commercial and
activation plans to meet the needs of new home beauty trends. In
particular it is seeing a sharp acceleration of its hair colour
sales, bringing market share gains and reinforcing its leadership.
The Division is modernising and accelerating the omni-channel
experience with its distribution partners, as well as “click and
collect”. The Active Cosmetics Division, despite a slowdown since
mid-March, has posted strong double-digit growth, driven by all of
its brands and especially by CeraVe at more than 40%. E-commerce
too is growing very fast. Medical visits now take place remotely,
encouraging online sales.Faced with the current exceptional
situation, all our teams are mobilised to reinvent the way we
interact with consumers and to create new digital formats and
connections.
NEW MARKETS
Asia Pacific: the Zone is at
-3.7% like-for-like and -2.5% reported, with a quarter very
contrasted geographically.
Mainland ChinaAfter a strong
start to the year prior to the Chinese New Year break, the lockdown
following the outbreak of Covid-19 led to the closure of many
stores, and as a result had an impact on the business in February.
The month of March showed progressive signs of recovery. L’Oréal
was able to rebound quickly to achieve growth in March and a
positive first quarter, gaining market share and reinforcing its
leadership position on the beauty market. This rebound was due to
the early restoration of operational capabilities in February,
strict application of safety measures to ensure a safe working
environment, as well as the rapid adjustment of activation plans in
favour of Online and O+O (Online + Offline) activities. A strong
bet on the Women’s Day Festival triggered the recovery. During this
online festival, L’Oréal China gained significant market shares
with a strong contribution from L’Oréal Paris, Lancôme,
SkinCeuticals, Helena Rubenstein, 3CE Stylenanda and Kérastase.
In Asia Pacific, tourist
markets were severely impacted due to the absence of Chinese
shoppers. Other countries resisted at the beginning of the year,
but from March were heavily impacted by lockdown causing business
disruption in all markets. Nevertheless, Indonesia posted
double-digit growth, and Australia is growing. Skincare has been
the most resilient category. The Active Cosmetics Division posted
strong growth across the Zone, especially in China, Japan and
Australia. The Professional Products Division was severely affected
due to the closure of hair salons in all markets.E-commerce
continues to grow at more than 60%, especially in China, Japan,
Australia, Thailand and Indonesia 2.
Latin America: the Zone is at
+0.8% like-for-like and -6.5% reported. The quarter was contrasted
with double-digit growth over the first two months and a sharp
deceleration in March.Brazil, Chile and Uruguay remained positive
for the quarter. Mexico had mixed results. Columbia and Peru were
heavily impacted by the closure of beauty stores and
perfumeries.The Professional Products and L’Oréal Luxe Divisions
both declined due to the closure of malls and salons in the Zone.
The Consumer Product Division was less heavily impacted and grew
over the quarter in Brazil and Chile. Active Cosmetics maintained a
strong rhythm of double-digit growth. By category, makeup and hair
colour have slowed given the closure of many distribution channels,
while skincare remains dynamic. The Zone has quickly adapted to the
environment with a strong focus on e-commerce, up by +45% 2.
Eastern Europe: The Zone is at
-1.4% like-for-like and -0.8% reported. After a good start of
the year, the month of March was impacted by lockdowns and store
closures in many countries of Central Europe, as well as Israel,
whilst countries such as Russia or Turkey have gone through partial
shutdown. The Zone experienced a drop in sales as of mid-March.
Turkey, Czech Republic, Romania and Ukraine remain positive. Food
stores, pharmacies, convenience stores and hard discounters have
remained open in many countries, however drug chains, perfumeries,
luxury retail and hair salons have come to a stop. In this context,
the Zone is focused on e-commerce (e-retailers, pure players, our
brands’ own websites) as well as food stores and pharmacies. In
terms of categories, the Zone focuses on hair colour at home,
haircare, face care and hygiene products.
Africa, Middle East: the Zone
is at -5.6% like-for-like and -6.3% reported. Middle Eastern
and North African countries were hit by lockdown measures in early
March. The major malls in the Middle East have closed, food stores
and pharmacies remain open. Saudi Arabia, Egypt and Pakistan posted
strong growth. South Africa reacted with a complete shutdown in the
last week of March, which has had an immediate and important impact
on sales. In the second quarter, the focus will be on e-commerce,
food stores and pharmacies, as well as home-use hair colour,
haircare and face care by category.
TRAVEL RETAIL
Despite an outstanding start to the year for our
global brands, Lancôme, Giorgio Armani, Yves Saint Laurent, Kiehl’s
and L’Oréal Paris, this channel ended the first quarter with a
double-digit decrease 1.The Travel Retail market has fallen in all
geographic Zones following the progressive closure of airports and
stores, and the standstill in air traffic. It should be stressed
however the progressive reopening of stores in Northern Asia in
particular. Note that the importance of our major fragrances has
been confirmed, as well as skincare – especially dermocosmetics –
in airport outlets. L’Oréal, in close collaboration with duty free
operators, is preparing for a gradual recovery by geographic
Zone.
Covid-19: Overview of measures taken by the L’Oréal
group
In view of the spread of the Covid-19 virus,
L’Oréal’s absolute priority is to protect the health of its
employees worldwide, while also ensuring that the Group provides
all its help and solidarity wherever possible. A number of measures
have therefore been taken, related to health, salaries and economic
matters.
Health measures
- All the L’Oréal group factories worldwide equipped with a
certified unit for handling alcohol and flammable substances (28
out of 39 factories) are today being used to produce hand sanitiser
gel in Europe, the United States, Latin America, Asia and Africa.
In all, some 2,400 tonnes of gel, representing more than 14 million
units, will be produced by the end of May 2020.
- Moisturising hand creams have also been donated for the use of
medical personnel.
- L’Oréal has mobilised its operational infrastructures in France
and China and placed them at the disposal of the French authorities
for ordering large quantities of medical equipment, including
hundreds of respirators and tens of millions of masks, which will
be transported to France in accordance with the government’s
instructions.
- Numerous health initiatives have been set up in the countries
where L’Oréal operates. In the United States, for example, the
Group has donated more than one million dollars worth of hygiene
and personal care products, and USD 250,000 to non-profit
organisations providing emergency support across America to
families suffering from financial or food insecurity. In Canada,
L’Oréal has also made a donation totalling CAD 200,000, comprising
both funding and hygiene products. In China, L’Oréal has
donated RMB 5 million to the Chinese Red Cross for the purchase of
emergency medical supplies.
Salary measures
- L’Oréal maintains jobs and salaries for all L’Oréal employees
worldwide.
- In France, L’Oréal will not furlough employees between now and
the end of June, even though in many fields of activity several
categories of employees are at a partial or total standstill.
Economic measures and corporate
citizenship
- All over the world, L’Oréal has chosen to help its small
professional clients and small perfumeries to defer the payment of
their debts in light of cash flow difficulties they may be facing,
until their activities recover. L’Oréal has shortened the delay of
payments to its most seriously affected suppliers.
- In France, the Group has given an undertaking that it will not
postpone the payment of any social or tax charges (contributions,
taxes, etc.) during this period.
L’Oréal Foundation
To contribute to the fight against the
coronavirus pandemic and its consequences for the most vulnerable
members of society, the L’Oréal Foundation has decided to donate
one million euros to associations, some of which are already
partners in the Foundation’s programmes, working in France to
combat deprivation. The L’Oréal Foundation will also provide
support to Emergency and Banco Alimentare in Italy.
Important events during the
period 01/01/20 to 31/03/20
- On 26 February, L’Oréal was recognised as one of the World’s
Most Ethical Companies by the Ethisphere Institute, a global leader
in defining and advancing the ethical standards of business
practices. This is the eleventh time that L’Oréal has achieved this
recognition, underscoring its commitment to leading with integrity
and prioritising ethical business practices.
- On 17 March, the 2019 Universal Registration Document was
registered with the French Market Authorities. The Universal
Registration Document comprises the annual financial report, an
integrated report, the reports from the Auditors and their fees,
and the information required for the share buy-back programme.
- On 30 March, the Board of Directors of L’Oréal held a meeting,
and in view of exceptional circumstances linked to the Covid-19
epidemic, decided to postpone the Annual General Meeting, initially
scheduled for 21 April, to 30 June 2020. The Board of Directors
will in due course determine the arrangements to be made for the
holding of the Meeting, as well as for the dividend and its date of
payment.
- On 31 March, after obtaining the necessary authorisations from
the relevant authorities, L’Oréal finalised the acquisition of the
Mugler brands and Azzaro fragrances from Clarins Group, in
accordance with the terms announced on 21 October 2019.
“This news release does not constitute an offer
to sell, or a solicitation of an offer to buy L’Oréal shares. If
you wish to obtain more comprehensive information about L’Oréal,
please refer to the public documents registered in France with the
Autorité des Marchés Financiers, also available in English on our
Internet site www.loreal-finance.com.This news release may contain
some forward-looking statements. Although the Company considers
that these statements are based on reasonable hypotheses at the
date of publication of this release, they are by their nature
subject to risks and uncertainties which could cause actual results
to differ materially from those indicated or projected in these
statements.”
This is a free translation into English of the
First quarter 2020 sales news release issued in the French language
and is provided solely for the convenience of English-speaking
readers. In case of discrepancy, the French version prevails.
Contacts at L'Oréal
Individual shareholders and market
authoritiesMr Jean Régis CAROFTel: +33 1 47 56 83 02
jean-regis.carof@loreal.com
Financial analysts and Institutional
investorsMrs Françoise LAUVIN Tel: +33 1 47 56 86
82francoise.lauvin@loreal.com
Journalists Mme Domitille FAFIN Tel: +33 1
47 56 76 71
domitille.fafin@loreal.com
Switchboard: +33 1 47 56 70 00
For more information, please contact your bank,
broker or financial institution (I.S.I.N. code: FR0000120321), and
consult your usual newspapers, the Internet site for shareholders
and investors, www.loreal-finance.com or the L’Oréal Finance app,
alternatively, call +33 1 40 14 80 50.
Appendix
L’Oréal group sales 2019/2020 (€ million)
|
2019 |
2020 |
First quarter |
7,550.5 |
7,225.2 |
Second quarter |
7,261.0 |
|
First half total |
14,811.5 |
|
Third quarter |
7,182.8 |
|
Nine months total |
21,994.3 |
|
Fourth quarter |
7,879.3 |
|
Full year total |
29,873.6 |
|
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1 Like-for-like: based on a comparable scope of
consolidation and constant exchange rates.2 Sales achieved on our
brands’ own websites + estimated sales achieved by our brands
corresponding to sales through our retailers’ e-commerce websites
(non-audited data).3 The measures are detailed further in this
article.
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