Coty Inc., the L’Oréal group and Unilever all released quarterly results this week, with notable sales growth across the board.
Highlights included the substantial rebound in fragrances, as noted by both Coty and L’Oréal, as well as the continued importance of the Chinese market in driving sales growth for all beauty brands and divisions. Unilever faced a tense earnings call, given the poor public performance the consumer goods conglomerate has faced over the past year. But company executives have also expressed a clear desire to invest and add more beauty brands to its portfolio, as this is seen as key to the company’s long-term success.
Glossy has rounded up the latest earnings, breaking down the highlights of each.
Coty announced its fiscal 2022 second-quarter results on Tuesday, noting that net revenue rose 12% from its prestige and consumer beauty units. This matched the growth forecast. The Prestige Beauty unit saw a 12% year-over-year sales increase, while Consumer Beauty sales were up 11% year-over-year. The earnings report noted that retail sales in travel doubled in the first half of the fiscal year, compared to the same period in 2021. Sales of Prestige fragrances increased by double digits in the second quarter, almost all brands contributing to it.
During the earnings call, CoverGirl, Rimmel and Max Factor were repeatedly cited as drivers of the Consumer Beauty unit. CoverGirl notably launched skincare in November 2021 and added actress America Ferrera as a brand ambassador. CoverGirl also took part in an Amazon shopping livestream alongside nail brand Sally Hansen, generating 1.6 million views and 3 million impressions.
“The idea isn’t to just launch another mascara or another moisturizer,” Coty Inc. CEO Sue Nabi said on the earnings call. “Coty’s vision is to build categories hand in hand with retailers. And that’s exactly what we did on Consumer Beauty… CoverGirl [regained] market share in the United States for 26 weeks out of the last 40 weeks, because we decided that we were going [categorize the brand] of its own beauty.
On the Prestige Beauty side, Gucci Beauty received an extended call during the earnings call. Nabi said Gucci makeup sales had doubled in stores and DTC e-commerce accounted for more than 50% of sales. Gucci makeup sales in China have tripled year-on-year, and makeup sales in China now exceed Gucci fragrance sales. In both the second quarter and first half of fiscal 2022, Gucci makeup sales more than doubled year-over-year.
The L’Oréal group announced phenomenal growth in its fourth quarter and full-year 2021 results on Wednesday, with sales up 15.3% to just over $37 billion. All four beauty divisions grew in 2021, with active cosmetics – including brands like La Roche Posay, SkinCeuticals and CeraVe, among others – leading the pack. They saw their sales increase by 31.8% year-on-year compared to 2020 and by 56.6% compared to 2019. However, L’Oréal Luxe is now the largest division of the group with more of $12.3 billion in sales, surpassing the consumer products sector. Luxe fragrances enjoyed “remarkable” success, according to the earnings report, with sales up 27% year-over-year.
“There are several reasons for [the success of fragrance]. First, perfume is linked to new consumption behaviors, centered on pleasure and well-being. Secondly, perfume allows you to regain a social life, just like makeup. All customers around the world wanted to return to a more active social life,” said Cyril Chapuy, Chairman and CEO of L’Oréal Luxe, during the earnings call. “But there are also fundamentals [behind] fragrance growth, [which] is the explosion of the Chinese market.
Despite strong sales growth, L’Oreal shares were down on Thursday on investor concerns that higher marketing spending was cutting profitability. Jefferies equity analyst Molly Wylenzek said in her equity research that she expects marketing spend to be overlooked by the public market. L’Oreal increased advertising and promotions in the second half, spending approximately $2.29 billion on marketing in 2021, an increase of 1.9% over 2020. Nicolas Hieronimus, CEO of L’Oreal Group, justified this increase during the earnings call.
“In this rebound year, we rebalanced a bit to allow (the consumer products division) to invest more heavily in their brands, and it paid off,” he said.
Unilever released its results for the fourth quarter of 2021 and full year 2021 on Thursday, with sales for the beauty and personal care units rising 3.8%, including 3.0% due to price increases and 0.8 % increases in sales volume. All categories grew except for skin cleansing, which declined following strong demand the previous year. The prestige beauty unit, which includes Tatcha, Hourglass Cosmetics and Paula’s Choice, among others, saw double-digit growth across all brands as channels reopened, with e-commerce a strong contributor. Overall, Unilever’s e-commerce growth was 44% and now accounts for 13% of Unilever’s sales.
Beauty and Personal Care underlying operating margin remained flat, with high material palm oil inflation having a particularly strong impact on gross margin, despite product price increases. Brand and marketing investments were lower overall due to setbacks in Europe and Southeast Asia, where Covid-19 restrictions impacted sales and marketing opportunities.
Of course, all the new beauty neutrals were juxtaposed against the backdrop of Unilever’s troubles. Unilever lost a bid for GlaxoSmithKline’s consumer goods unit after the company rejected a $67 billion bid in late January. Following the news, it was revealed that activist investor Nelson Peltz had bought an undisclosed stake in the company and that Unilever would cut 15% of its senior management jobs, resulting in the loss of 1,500 positions.
“After months of careful consideration, the board concluded that accelerating our transition to consumer health, wellbeing and beauty as two highly attractive adjacencies would position Unilever for faster growth. for decades to come,” Unilever CEO Alan Jope said when the results were released. to call. “This was the origin of what were to be confidential discussions with GSK and Pfizer.… We are absolutely committed to moving the portfolio to these attractive spaces of beauty and consumer health and well-being, but we are more patient [now] with how we get there.