L'Oreal Predicts Rush To Hair Salons Once COVID-19 Lockdowns End

Reps for the beauty firm note that sales have already popped back in China after lockdown measures were eased.

PARIS/BERLIN (Reuters) - L’Oreal (OREP.PA) is counting on consumers rushing back to hair salons to help its business recover quickly once European and U.S. coronavirus lockdowns are lifted, it said on Thursday, adding that beauty sales were bouncing back already in China.

Like peers, the French firm, which makes Garnier shampoo and Lancome creams, has been hit by the closure of airport duty-free shops, department stores and salons as countries restrict people’s movements to fight the pandemic.

Confinement measures have dragged on make-up sales, with about 90% of women shunning their cosmetic routines while working from home, according to a survey by Jefferies.

But L’Oreal, the world’s biggest beauty firm by sales, provided an upbeat outlook despite a 4.8% fall in comparable first-quarter sales, in a potential boost for some rivals like U.S.-based Estee Lauder (EL.N).

It pointed to a turnaround in China, where sales rose 6.4% in the January to March period, and lockdown measures have eased.

Skin and hair-care products did well during the confinement period there as e-commerce sales surged, L’Oreal Chief Executive Jean-Paul Agon said, and other items are now in demand too, even if some make-up products are lagging as Chinese consumers wear face masks to return to work.

“It is not of course a great incentive to wear lipstick,” Agon told analysts.

“Once stores will be open again ... I think we will be back to a consumption pretty similar to what we have seen before,” he said of other countries.

L’Oreal did not provide an earnings forecast for 2020, and analysts expect the sales drop will worsen in the second quarter as the European and U.S. closures bite. But revenue from China, L’Oreal’s biggest market, could increase over 10% in the April to June period, Agon said.

The company also provides products for professional hairdressers, which could be a bright spot later this year, with Agon citing a “dire need” expressed by many women to touch up their hair color.

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