L'Oreal Q2 - Shifting Online

Quite a few clients in New York own L'Oreal shares, and their most recent quarterly results were a bit mixed. For the first half of the year sales of 13.1 billion Euros were recorded, which is a decline of 11.7% on this same period in 2019.

CEO Jean-Paul Agon said: "The consumption of beauty products over the period was strongly impacted by the closure of millions of points of sale (hair salons, perfumeries, department stores, airport stores, etc.), which caused a real crisis of supply rather than demand, with consumers temporarily unable to purchase products and services."

On the plus side, sales grew by 17.5% in China, and sales online rose by 64.6%.

L'Oreal's chief digital officer, Lubomira Rochet (pictured below) noted that the lockdowns have sparked broad changes to how women discover and shop for beauty products by pushing more activity online, especially among older customers. "In e-commerce, we achieved in eight weeks what it would have otherwise taken us three years to do."

L'Oreal, which is the world's biggest cosmetics maker by sales, believes many of these behaviours will last after the pandemic goes away. New marketing tools, such as virtual try-ons for make-up and hair colour and one-on-one beauty consultations via Zoom, also proved their usefulness while stores were closed.

About 20% of L'Oreal's revenues now come from its own branded websites or those of online retailers such as Amazon or Walmart. L'Oreal has apparently shifted its advertising and marketing spending online, taking it to about 70 per cent of the total from 50 per cent before the pandemic.

The stock price has done well, about as well as Nike over the last 5 years. In other words, it has doubled (up about 100%) in that time. This is definitely a stock to hold, if you own them already.