L'Oréal sees sharp sales fall in Q2

L’Oréal’s Q2 results have been announced, with sales missing financial analysts’ estimates, as the world’s largest beauty company’s business revealed the impact from the coronavirus pandemic.

Overall revenue was $6.90 billion for April-June 2020, down 18.8% on a like-for-like basis. Analysts had on average expected a 13.1% like-for-like sales drop, according to a consensus forecast cited by Berenberg.

The company, which produces brands including Maybelline and Kiehl’s reported that Coronavirus lockdowns hit retailers and manufacturers hard as the outbreak spread from Asia to Europe and the US.

L’Oréal sells a large amount of its products through concessions in airports, which were also closed or faced reduced hours as tourist numbers dried up and travel dropped.

The group also reported it was impacted by the closure of hairdressing salons, as sales of professional products tumbled more than those of others.

Jean-Paul Agon, Chairman and Chief Executive Officer of L'Oréal, said: “The L’Oréal group has shown great resilience during this first half of 2020, marked by the crisis of the COVID-19 pandemic.

"The Group’s first priority during this period was to ensure the health and welfare of its employees everywhere in the world, to protect its small clients and suppliers with credit and payment facilities,

"In these exceptionally difficult circumstances, each Division of L’Oréal has demonstrated great business resilience. The Active Cosmetics Division has managed to maintain good growth. The Consumer Products Division limited the impact on sales despite its heavy weight in makeup, which was the category that slowed the most.

"This business resilience was made possible by several key strengths of the Group. First of all, our lead in the field of digital and e-commerce, which proved to be crucial during the crisis and is now even bigger, with e-commerce growing by 64.6% over the first half.

"L’Oréal's performance in mainland China was also decisive, with growth in the second quarter of 30%. Finally, the power of our brands and our major products, which are a true refuge for consumers in these troubled times. We must also underline the tremendous mobilisation and remarkable agility of our teams throughout the world.

"At the same time, the Group was able to deliver results that demonstrate solid resistance: profitability at 18% close to the annual level of 2019, limited decline in earnings per share, and overall a very well preserved profit and loss account, with a high gross margin, lower costs, and investment in research and business drivers maintained in relative value."