LRLCY stock has shown gains of 10% from levels of $75 in early January 2021 to around $82 in mid-September 2024, vs. an increase of about 45% for the S&P 500 over this period.
However, the decrease in LRLCY stock has been far from consistent. Returns for the stock were 27% in 2021, -24% in 2022, and 41% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 - indicating that LRLCY underperformed the S&P in 2022.
L'Oréal reported its 2023 results earlier this year. The company saw sales rise to €41.2 billion, up from €38.3 billion in fiscal 2022. It saw operating profit margins rise from 19.5% in 2022 to 19.8% in 2023. The bottom line stood at €11.52 versus €10.61 in 2022.
L'Oreal's Skin Care Revenue: Skin Care is L'Oreal's largest segment and sales have risen from $9.16 billion in FY '17 to $16.5 billion in FY '22. We currently forecast L'Oréal's Skin Care sales to reach $28.7 billion by the end of our forecast period. There could be a downside of more than 10% to the Trefis price estimate if the Skin Care revenues remain flat at the current level.
L'Oreal's Hair Care Revenues: Hair Care is L'Oreal's second largest segment and sales have roughly hovered between $8 billion and $10 billion since FY 2007, all the way to FY 2022. However, we expect sales to gradually rise in the lower single-digits going forward, to rise to around $15 billion by the end of our forecast period. There could be a downside of more than 10% to the Trefis price estimate if the Hair Care revenues remain flat at the current level.
L'Oreal is the largest manufacturer of cosmetics in the world. It manufactures and sells makeup, fragrances, skin care, and hair care products through over 30 global brands. It caters to consumers across all income levels and distribution channels spanning mass volume retailers and drugstores, to upscale perfumeries, pharmacies, department stores, company-owned stores, and e-commerce websites.
L'Oreal reports and segments its products on the basis of price range and distribution channel into: Professional, Consumer, Luxury, and Active products.
L'Oréal's main competitors include other major global beauty care products manufacturers such as Revlon, Estee Lauder, Avon, Shiseido, and Procter & Gamble, among others.
L'Oreal has the largest market share in the Skin Care segment, the largest and fastest growing segment within Beauty Care (on account of anti-aging skincare and skin care for men), as well as in the Fragrances and Makeup segment.
Launching new and innovative products is crucial to growing or even maintaining share in the beauty care industry. L'Oreal spends more on R&D as a percentage of sales as compared to its competitors. This has helped L'Oreal remain a leader in the cosmetics market.
On the basis of revenue, L'Oreal (at ~$40 billion) is much larger than Revlon ($4 billion), Avon ($10 billion), and Estee Lauder ($15 billion). Therefore, L'Oreal has more money to spend on marketing, which is an extremely important factor for success in the cosmetics industry.
Anti-aging creams and anti-cellulite skin care products are in high demand among the aging populations in developed countries, notably Japan (oldest demographic), the U.S., and Western Europe. A big chunk of L'Oréal's skin-care business comes from anti-aging products. The anti-aging market comprises of those products that can treat multiple signs of skin aging at one time, and is a fast-growing segment under the anti-aging beauty products.
There is a growing demand for natural / organic products in most countries, a trend led by the developed markets in the U.S. and Western Europe. Additionally, there is an increased preference for less synthetic, eco-friendly, and more natural products and packaging.
There is a growing trend towards the so-called "Masstige," or premium brands sold at lower prices through mass distribution. In addition, beauty care products focused on men is the latest niche being targeted by most players globally. In developed markets, particularly in the U.S. and Western Europe, the introduction and extension of the men's product lines is a major source of growth.