Lip gloss for your portfolio

Last Updated: 5. Februar 2024By

Do you like luxury? Experience has shown that the extraordinary is always in demand – even when the economy is not doing so well. A niche that occupies the cosmetics company L’Oréal is quite interesting – as cosmetics can be afforded by many income groups. L’Oréal is the world market leader in cosmetics with a share of 16%, focusing on hair, skin and body care, makeup and perfumes. L’Oréal develops, produces and distributes health and beauty products under well-known brands such as Lancôme, Vichy, Garnier, Giorgio Armani, Jade and Ralph Lauren. They cover the entire range from mass-produced goods to luxury items.

A lipstick makes investors happy L’Oréal has presented good figures for the first 9 months and increased sales by 9.4% in all divisions to 30.6 billion euros. The company did not provide any information on profits. The most sales-intensive division, Consumer Products, was able to increase by 10.8% to 11.5 billion euros. The makeup segment was boosted by new releases such as the Falsies Surreal Mascara from Maybelline New York, the Infallible Matte Resistance lipstick from L’Oréal Paris, and the Fat Oil Gloss from NYX Professional, which particularly benefited from the collaboration with the film Barbie the Movie. The Dermatological Beauty division also performed well.

Sales increased by 27.3% to 4.9 billion euros. La Roche-Posay, the number one among the growth drivers, continued its strong growth trend, especially thanks to Effaclar, Cicaplast and UVmune 400. CeraVe achieved high double-digit growth both in North America and in the rest of the world. Latin America had the best regional performance, with sales increasing by 27.4% to 2.3 billion euros.

Our view on the stock L’Oréal’s wide range of products allows them to meet the different needs of consumers in the region. Mexico and Brazil were among the most important growth drivers. However, things did not go so well in North Asia. The market was affected by the conversion of travel retail after changes regarding Daigous.

It is difficult to say how this change will affect the company in the future. The stock is moderately interesting to us, also due to the rather meager dividend yield. However, the upward trend is clearly intact.