September 20, 2021

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L’Oréal expects a rebound in sales of cosmetics with the end of the crisis

By Sarah White

PARIS (Reuters) – The new chief executive of the French cosmetics giant said on Friday that L’Oréal is counting on a revival of sales of cosmetics, with a gradual exit from the health crisis and the need to renew social relations.

Cosmetic groups were punished last year by closing stores during confinement periods, and their customers, masked or isolated at home, avoided “make-up” products, retreating from purchasing “other products such as skin care” online.

But Nicolas Hieronymus, L’Oréal’s chief executive since the start of the month, is taking control of the group at a time when national vaccination campaigns allow us to peek at a way out of the health crisis tunnel.

He notes that products like mascara are making a comeback, and new trends may appear as well. For example, today consumers are choosing more bold colors for their hair, with shades like blue.

“This is a clear sign that people want to have fun, have fun and express their differences and uniqueness,” Nicholas Hieronymus said in an interview with Reuters. “This is a good omen.”

He adds that makeup sales in countries such as China or Israel, where stores are open and restrictions imposed to tackle the outbreak of the Coronavirus have not yet reached 2019 levels, but it could do so early this year.

L’Oréal’s new CEO notes: “We are researching conversation topics on the Internet and on social networks, and in the United States recently, the volume of discussions about makeup has reached an unprecedented level.”

New products

The decline in cosmetic sales in 2020 affected the group’s sales volume and its consumer division, which includes brands such as Maybelline.

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The world’s No. 1 cosmetic company revenue fell 6.3% to 28 billion euros last year, although it began to recover at its good pace in the second half of the year.

L’Oréal will make the most of this recovery by launching products, in particular the new cosmetics range of its luxury Italian brand Valentino, as Nicolas Hieronimus identifies.

Other brands have also created during the pandemic, such as Nyx’s “Shine Loud” lipstick, which was introduced this year, and is designed not to stick to clothes, but its marketing campaign also took into account wearing a mask. , He continues.

Nicolas Hieronymus, who started his career nearly thirty years ago at L’Oréal at Garnier Laboratories, before becoming a group manager in Mexico and then leading the luxury division, will have to face challenges. Other challenges during his tenure, particularly the increasing demand for natural ingredients in beauty products.

The French group has invested heavily in what it calls “beauty technology,” “technology-enhanced beauty,” which consists, for example, in providing platforms that allow you to virtually test your “look” or use data to predict next trends.

“As the world changes, you have to know how to be agile” sums up.

L’Oréal and other major cosmetic groups like Estée Lauder have been rocked in recent years by small brands that can grab attention thanks to constant product changes and smart social media campaigns.

E-commerce, which today accounts for just under 30% of L’Oréal’s revenue, will likely reach half of the group’s sales by the end of the decade, according to the group’s projections; even within three years according to Goldman Sachs’ estimates. This is already the case in China.

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(French version by Jean-Stéphane Bruce, edited by Bertrand Bossi)