Beauty Company L'Oreal Sees Luxury Gains In China
Together with China's e-commerce platforms and the Chinese preference for luxury goods, L'Oreal's earnings for the first half of 2019 was impressive.
The company's highest half-year in 10 years got posted with revenue increasing year-on-year at 7.3 percent. This amounted to 4.81 billion euros ($5.36 billion).
Stressing the importance of a good first half-year performance, Jean-Paul Agon, chairman and chief executive officer of L'Oreal group said that "In a volatile and contrasting environment" their good profit on the first half gives them "confidence to outperform the market in 2019" assuring them another year of profits.
The surge in sales to 30.4 percent amounting to 4.6 billion euros in Asia-Pacific was mainly driven by Chinese consumers. The region's performance trumped all other zones.
With the company closing 2018 strong, Jean-Paul was already confident that the acceleration of the market is staying strong in 2019 citing growth like Asia, eCommerce, travel retail and skincare.
Focusing on China, he added that millions of consumers have income that affords them to indulge. Likewise, they have products priced at different levels helping L'Oreal Paris become the number one beauty brand in China.
This is not to say that selling in the Chinese market is easy. Bain and Co global market consultancy firm reported that a great amount of cosmetic and personal care brands are getting sold in China and the competition is now strong.
The National Bureau of Statistics has the retail sales of consumer goods reached 19.5 trillion yuan ($2.8 trillion) only on the first half of 2019 and the nominal year-on-year growth rate is at 8.7 percent.
Premium brand L'Oreal was introduced in the country sometime around 1997 and is now getting a boost from China's e-commerce success across Asia-Pacific.
Getting roots in the Chinese market is attributed to the brand name. When translated, it reiterates skincare and well-being, two words that go well with the Chinese culture when it comes to herbal medicine.
Now, with a portfolio of 23 iconic brands, it is the Chinese leader in makeup, skincare and men skincare and its online success is an inspiration to the country's digital acceleration.
China's online profits steeped at 17.8 percent amounting to 4.8 trillion yuan.
Newly appointed CEO of L'Oreal in China, Fabrice Megarbane assured that the company will continuously invest in the Chinese market by focusing on technology-applied cosmetics.