L’Oreal, the French company behind Lancome and Maybelline cosmetics, said Thursday it was back to revenue growth in the third quarter thanks to strong demand in China and booming online sales.
Like companies in the luxury goods sector, L’Oreal was hit hard by coronavirus lockdowns earlier this year when stores and airport retailers shut down. It was also hurt by hair salons having to close temporarily, as it sells professional products.
The company beat market expectations in the July to September period, with sales coming in at 7 billion euros ($8.27 billion).
That was a 1.6 percent rise from a year earlier on a like-for-like basis, which strips out currency effects and acquisitions, and compared to a 19 percent drop in the previous quarter.
Analysts had expected sales to improve but to remain down from the same period last year.
The biggest driver of the improvement came not from L’Oreal’s best known makeup brands, however, but from its active cosmetics division, which caters to dermatological conditions with brands like Vichy and La Roche Posay.
Revenue growth in L’Oreal’s luxury products unit, home to Lancome and which makes cosmetics for Armani, lagged that of other divisions, and remained in negative territory. This was partly due to the impact of travel restrictions, it said.
L’Oreal has remained upbeat about the outlook for beauty products throughout the coronavirus crisis and despite concerns that government-enforced lockdowns would discourage people from wearing makeup.
L’Oreal said Thursday it expected to produce like-for-like sales growth in the second half of 2020 as a whole.
It added that growth in China and Brazil had been particularly strong in the third quarter. Luxury goods brands from Hermes to Louis Vuitton have also pointed to strong demand in Asia as COVID-19 restrictions ease.
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