Following L’Oréal’s announcement of their best quarter in 10 years mostly supported by Asian growth,
Aleksandrina Yotova, Consumer Analyst at GlobalData, offers her view on the future of the company:
“Western Europe remains L’Oréal’s biggest market with €1,855.9m worth of revenue in Q3 2018, which only highlights the importance of the company’s strategy to return to growth in the region.
“However, in Q3 the company registered a particularly strong growth in Asia, achieving €1,794.2m worth of sales, only €61.7m less than Western Europe. It is likely that while L’Oréal preserves its leadership in Western Europe and North America at current levels, its presence in Asia will keep growing.
“Digitalisation will play an important role in attracting Asian consumers, and the company keeps on innovating in this field. With the acquisition of Canadian AR beauty company, ModiFace earlier in 2018, L’Oréal’s digital acceleration has stepped up, outrunning competitors Estée Lauder and Sephora, who have counted on ModiFace in the past for AR beauty apps development.
“E-commerce is up by an impressive 38.3% in the nine months to September 30. Thanks to e-commerce and the new AR/AI technology, L’Oréal aims to bring Paris to Asian consumers virtually, which creates new growth opportunities.
“As part of the strong overall Q3 results, came improvements in Western Europe. Performance of mass market cosmetics has been weak in the region, but brands like Garnier shampoo have delivered slightly better figures than the previous quarter. L’Oréal announced a sales decline of -0.7% in Western Europe in Q3 2018, better than the -2.0% registered in Q2. The company plans to keep investing in the region in order to achieve gains in market share.
“Due to consumers continued demand for premium beauty products, performance in the luxury division was particularly strong in Q3, registering a 15.6% growth. This was supported by luxury labels like Lancôme, which remained robust in Asia. The Active Cosmetics division was the other main contributor to growth, achieving 13.1% in Q3. It performed particularly well in North America and Asia, with the brand SkinCeuticals reported to have shown an outstanding growth.”