L’Oréal posts 13% growth in Q1 as beauty continues to shine

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.