Strong performance in mainland China drove the French beauty brand’s strongest sales growth in a decade last year, further easing concerns that a slowdown will impact the luxury market.
“The market accelerated and could stay strong in 2019. We have many reasons for this strong growth like Asia, eCommerce, travel retail, skin care, and all these reasons will stay here in 2019, so we are pretty optimistic for this new year,” CEO Jean-Paul Agon told CNBC.
L’Oreal posted 24.1% annual growth in Asia-Pac last year, greatly outstripping a 2.7% increase in North America and a 0.3% decline in Western Europe. L’Oreal is not the only luxury brand to have beaten off fears of slowing Chinese sales, with industry bellwethers LVMH and Gucci also exceeding expectations.
Agon added that the industry could be set to soak up weaker demand for autos and technology, which have both been hit hard by the slowdown.
“It’s the famous ‘lipstick effect’ – sometimes when people spend less on expensive items like cars or buying apartments, they have more available income and the like to indulge themselves with beautiful products. It could be absolutely positive for us,” he said.