L'Oréal China grew 6.4% in the first quarter, 'Demand is in, the market is in'

An Gong, Chairman and CEO of L'Oreal Group, said in a conference call that from the current situation, the impact on skin care and beauty products will continue until the second quarter. But taking China as an example, the epidemic will not affect consumers' strong desire for beauty products. This shows that everyone's demand is still there. As long as the sales channels are fully reopened, the market is expected to rebound quickly.

 
01 Global performance is declining, but the Chinese market increased by 6.4%

An Gong said that firstly China in January, then the rest of the world, especially in Western Europe and North America since the beginning of March. During the epidemic, all regions were gradually affected by the closure of sales outlets and restrictions on activities.

Among them, the closure of the Chinese market in February led to the closure of many stores, which affected performance. But starting in March, signs of recovery gradually appeared, and L'Oreal China rebounded rapidly, achieving a positive growth of 6.4% in March and the first quarter.

 
The financial report also shows that the reason why the group has rebounded in China is mainly due to the early restoration of operating capacity in February. Including strict implementation of safety measures to ensure a safe working environment, rapid adjustment of the activation plan to support new O2O activities, plus 3.8 node marketing, etc. Among them, L'Oreal Paris, Lancome, Xiulike, Helena, 3CE Stylenanda and Ka Shi made outstanding contributions.

 
By region, L'Oréal Group's sales in the Asia Pacific region fell by 3.7%, Western Europe fell by -7.7% and North America fell by -4.8%. Sales in Latin America, Eastern Europe, Africa, and the Middle East, which are also emerging markets with Asia, were + 0.8%, -1.4%, and -5.6%, respectively. All markets except Asia-Pacific were severely affected by the epidemic in March.

 
02 Active health gained 13.2%, Professional hairdressing and high-end beauty are most affected

In terms of sectors, the four major divisions of the L'Oreal Group-the mass consumer products department, high-end cosmetics department, professional hairdressing products department, and active health department have the same volume rankings, respectively -3.6%, -9.3%, -10.5, 13.2% Year-on-year performance changes.
Among them, because many countries have closed perfume factories, department stores, hair salons and airport sales outlets, the professional hairdressing department and high-end products department are most affected by the epidemic. However, the financial report emphasized that although the high-end products sector has declined, its performance is still better than the global high-end beauty market with a decline of about 16% in the first quarter.

 
The financial report said that in the health crisis caused by the epidemic, make-up is the most affected category, and facial skin care has also slowed down. On the contrary, cleansing and washing are accelerating. High-end skin care and perfumes are more flexible, reflecting consumer demand for products related to health and personal care.

 
As far as brands are concerned, Coyan, Lancome and Helena performed significantly better in the market; Kashi achieved growth in the first quarter; Maybelline, NYX and other professional make-ups experienced a temporary slowdown.

 
In addition, the Active Health Department is particularly worth mentioning.

 
Despite the health crisis sweeping across Asia and spreading in Europe, the active health sector still achieved double-digit growth. The financial report shows that about two-thirds of these sales come from pharmacies and pharmacies. Since the outbreak of the epidemic, these pharmacy channels have been open, so brands such as La Roche-Posay and Solatra can meet consumers' needs for healthy skin care. And their growth in the Chinese market is due to successful digital activation and e-commerce performance.

 
03 E-commerce surged 52.6%, travel retail setback

The financial report emphasized that in the first quarter, e-commerce was still the main growth driver of the group, with a year-on-year increase of 52.6%, accounting for nearly 20% of the group's total sales. In the Asia-Pacific region, e-commerce continues to grow at a rate of more than 60%.

 
And in the second quarter of Latin America, Eastern Europe and Africa & Middle East, e-commerce will be one of the main development strategies. An Gong said in the conference call that the epidemic crisis is a powerful accelerator for digital transformation.

 
But at the same time, L'Oreal Group's "sixth continent"-the tourism retail sector was hit.

 
The financial report said that with the gradual closure of airports and shops and the stagnation of air traffic, the tourism retail market in all regions has declined. However, L'Oreal also emphasized that some duty-free shops in North Asia are gradually reopening, and the important position of travel retail in perfumes, skin care and cosmetics will not be shaken. The Group is currently working closely with tax-exempt operators to prepare for the gradual restoration of the geographic area.

 
04 The impact will continue into the second quarter, but the demand for beauty is still in

L'Oreal Group CEO An Gong said in a conference call that the impact of new coronary pneumonia will continue into the second quarter. But he believes that the epidemic will not affect consumers' strong desire for beauty products. This shows that everyone's demand is still there. As long as the sales channels are fully reopened, the market is expected to rebound quickly.

 
The financial report shows that at present, the L'Oreal Group has a total of 39 factories worldwide, of which 28 have been used to produce disinfectant hand sanitizers. By the end of May, a total of about 2,400 tons of hand sanitizer will be produced. The group handed over its operating infrastructure in France and China to the French authorities to order large quantities of medical equipment, including hundreds of respirators and millions of masks.

 
The aid plan is also proceeding in an orderly manner. In the United States, L'Oréal has donated more than one million US dollars worth of health and personal care products, and donated 250,000 US dollars to non-profit organizations; in Canada provided a total of 200,000 Canadian dollars in donations, including funds and hygiene products. In China, L'Oreal has donated 5 million yuan to the Chinese Red Cross for the purchase of emergency medical supplies.

 
The L'Oréal Group promised in its financial report that even if some employees have stopped working, they will not lay off employees until June this year. And has helped small professional customers and small perfume factories in the world to postpone debt repayment until the business resumes. The payment cycle is also delayed for the most affected suppliers.

 
In the previous release of the new crown virus assistance plan, An Gong once said: "In this unprecedented crisis, we have a responsibility to make every possible contribution to the joint fight against the epidemic. L'Oreal hopes to adopt a series of measures to be brave in this battle The fearless and selfless people expressed their thanks and support, and we will always be with you. "