Economy
27 November 2022
The Week Ahead: Cyber Monday; inflation data; Kroger, Ulta earnings
Check out what's ahead in commerce for Nov. 28- Dec. 2.
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Welcome to a new week. The holiday season is in full swing, with Cyber Monday arriving to bookend the Cyber Five with an exclamation point for ecommerce. Later in the week, a bevy of earnings from retailers will provide plenty of color around the holiday weekend results. Meanwhile, economic data from the federal government will provide a portrait of consumer demand, and cover both sides of the Federal Reserve’s dual mandate of jobs and inflation as the central bank considers whether to slow the pace of interest rates.
Events
Cyber Monday: The biggest shopping weekend of the year closes out with a bevy of online deals. Adobe Analytics forecasts that Cyber Monday will bring in $11.2 billion via ecommerce, which would be an increase of 5.1% over 2021. It’s the culmination of a promotional period that has been running for (at least) a week. Underscoring the point, Amazon started Cyber Monday savings on Saturday. (Nov. 28)
Economic indicators
Consumer Confidence Index: The Conference Board releases the monthly measure of attitudes and expectations on key economic topics including inflation and interest rates. This comes after consumer sentiment, as measured by the University of Michigan, fell 5% for the month. (Nov. 29, 10 a.m.)
Retail Inventories: The US Commerce Department provides a look at the goods sitting in retailers’ stock for the prior month. In September, this measure fell slightly by 0.1% month-over-month for the first time since June 2020, but the rate remains high amid the glut of inventory that followed supply chain issues. (Nov. 29, 8:30 a.m.)
JOLTs: The Job Openings and Labor Turnover Survey from the US Bureau of Labor Statistics offers a measure of available roles, quits and hiring for the prior month. (Nov. 30, 10 a.m.)
Personal Consumption Expenditures: The US Bureau of Economic Analysis releases its report on consumer spending and inflation for October. The price index in this report is closely watched by the Federal Reserve, and all eyes will be on whether it shows cooling in the same way that the Consumer Price Index did earlier this month. (Dec. 1, 8:30 a.m.)
Jobs report: The US Bureau of Labor Statistics releases its monthly report on unemployment and job creation for November. This is the key measure of the labor market, and serves as a dual-sided indicator. Any new jobs added will be seen as good for demand at the outset of the holiday season, while an uptick in unemployment may provide evidence that the Federal Reserve’s inflation-fighting efforts to cool demand through interest rates are having an effect. (Dec. 2, 8:30 a.m.)
Earnings
- Mon., Nov. 28: Pinduoduo
- Wed., Nov. 30: Hormel Foods, PVH Corp., Victoria’s Secret and Co., Salesforce, Simply Better Brands, Five Below.
- Thurs., Dec. 1: Ulta Beauty, Designer Brands, Kroger, Lands End, Tillys, Zumiez.
- Fri., Dec. 2: Kirkland’s
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Brand News
20 April
L’Oréal posts 13% growth in Q1 as beauty continues to shine
The world's largest beauty company is benefitting from a market-wide shift toward wellness.
Photo by Evangeline Sarney on Unsplash
L’Oréal offered a sign that beauty is continuing to radiate in an otherwise tough retail market to start 2023.
The world’s largest cosmetics and beauty company posted sales growth of 13% like-for-like for the first quarter of the year. According to the company's earnings report, growth came in all divisions, paced by 30.6% year-over-year growth in dermatological beauty, and 14.7% growth in consumer products.
In North America, L’Oréal grew 16.6%, with consumer products innovation at Maybelline New York, L’Oréal Paris, and Garnier providing a lift.
“Boosted by valorised innovations in all divisions and the engagement of our teams around the world, L’Oréal has outperformed the market in all geographic zones and strengthened its leadership position,” said CEO Nicolas Hieronimus, in a statement. “This performance, which has yet to benefit from China’s reopening, demonstrates the strength of L’Oréal’s balanced multipolar model.
L’Oréal’s performance arrives as the beauty market continues to post strong results, despite a consumer pullback in other consumer categories amid inflation. Instead of seeking out less expensive products, consumers in this category are trading up, as prestige beauty sales growth to $27 billion in revenue outpaced mass beauty, according to Circana (formerly IRI and NPD Group). It appears the lipstick index is trending toward luxe.
“For many consumers, beauty is indispensable,” said Larissa Jensen, beauty industry advisor at Circana, in a statement. “In fact, among beauty shoppers who reported reducing their overall spending due to inflation, seven out of ten said they were not cutting back on their beauty spending. On the contrary, consumers have shown us that when economic sentiment gets shaky, they turn to prestige beauty products for an emotional lift. This ‘treat mindset’ is a big piece of what ties the complete beauty industry picture together.”
On the company’s earnings call, Hieronimus said beauty products are increasingly being embraced beyond occasions, and moving toward wellness. Fragrance is now an every day product, as opposed to one that is used for going out on Saturday night, he said. Jensen said fragrance is being tapped by consumers for “self care,” whether to lift their mood, de-stress or energize. Skincare products also have multiple uses, from aging to daily UV protection.
“We are lucky to be in this market where people are spending money to take care of themselves, not just to feel good but also to protect their skin, their hair,” Hieronimus said. “That’s what makes me confident that the beauty markets will continue to grow.”
L’Oréal is seeking to continue its gains by adding new brands to its portfolio. The results arrive on the heels of the announcement that L’Oréal will be acquiring the luxe brand Aesop from Natura & Co. for $2.5 billion. When the deal was announced, Hieronimus called the brand a “superb combination of urbanity, hedonism and undeniable luxury.”
"Mindful of the current uncertainties, we remain optimistic about the outlook for the beauty market, ambitious for the future and confident in our ability to keep outperforming the market and achieve another year of growth in sales and profits in 2023," said Hieronimus.
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