Last month, reports started circulating that L'Oréal was shutting down mass-market make-up brand Maybelline’s physical stores in China and shifting the brand online completely.
However, on the company’s first half (H1) earnings call held on July 29, CEO Nicolas Hieronimus confirmed that the reports were inaccurate.
Hieronimus stated that Maybelline would continue to have a physical presence in China through partners such as leading health and beauty retailer Watsons, despite the strength of e-commerce in the Chinese market.
“It's true that the make-up mass market in China is 80% e-commerce, but we have brick-and-mortar presence. We have thousands of stores where Maybelline is present, taking Watsons’ stores for example.”
Instead, Hieronimus clarified that the company was shutting down 14 freestanding Maybelline stores that were underperforming.
“We had 14 freestanding stores of Maybelline which are not productive anymore considering that the market is heavily shifting towards e-commerce, so these are the ones we are closing.”
This signals the company’s determination to focus on the distribution of Maybelline through e-commerce.
According to Hieronimus, this would mean that the lion’s share of Maybelline China’s business would take place online at 80%, and the remaining 20% would be through brick-and-mortar retailers, primarily drugstores.
North Asia strong despite COVID-19 woes
In mainland China, the beauty market contracted significantly at the beginning of the second quarter due to the lockdown. However, thanks to its supply infrastructure, L’Oréal was able to cope with disruptions.
The reported that it achieved solid performance, with double-digit growth in June, reinforcing its market share in all divisions during the second quarter, said the company.
According to the firm, during the Tmall 6.18 Shopping Festival, L’Oréal Paris top the ranking in skin care and overall beauty; Kérastase was ranked number one in hair care, while Stylenanda 3CE topped the make-up rankings.
The entire North Asia division posted growth of 10.5% like-for-like and up 20.3% on a reported basis.
Overall, L’Oréal reported worldwide sales of EUR18.36m (USD18.68) for H1 2022, up 20.9% on the previous year, along with second quarter (Q2) sales of EUR 9.3m, up 22.7%.
Like-for-like growth for the half year sat at 13.5% and 13.4% for Q2. Total net profit excluding non-recurring items after non-controlling interests soared 25.2% to hit EUR3.25m (USD3.28m) for H1 2022.