L’Oreal, which is known as one of the world’s largest U.S. cosmetic brands, failed to meet their targets for its second-quarter sales growth, indicating the weak U.S. market demand as a significant contributor.
In a statement given by the Chairman and Chief Executive Jean-Paul Agon, he believes that the trading environment was never steady in the American market. Similar to other industries, makeup and cosmetics trade is also vulnerable to the country’s economic cycles.
Agon reminded that L’Oreal started in America from scratch 50 years ago. Though they are currently at the forefront, the journey had never been a walk in the park. The company knows that some years are better than the others. He adds, “This year is a bit tough, we acknowledge that.”
Consumer analysts, on the other hand, have reported a significant growth in the U.S. market in the last five years. One of the main reasons is because of the influx of celebrity-owned makeup brands, like Fenty Beauty by pop star Rihanna or Kylie Cosmetics by Kylie Jenner.
The massive wave of Instagram bloggers and internet influencers promoting these cosmetics and their makeup tutorials has also given birth to a generation of millennials and Gen-Z’ers who are more comfortable and more confident in using various makeup products, styles, and application techniques compared to their generation’s parents.
However, as Agon mentioned, the makeup market in its entirety is slower in the U.S., which might entail that the recent boom may have peaked.
Analysts say that this pause in the American market in the last 12 to 18 months might translate to consumers searching for more niche or luxury makeup products, instead of mass-market offerings.
When asked about how long this dynamic would last, Agon did not believe it would be too long, noting that maybe the cupboards are a bit full of makeup and people may decide to begin buying again eventually.
Shares of L’Oreal were trading 4.5% lower the week following the missed target reports.