Analyst Note| Rebecca Scheuneman, CFA |
In its third quarter, L’Oreal’s like-for-like sales grew 13.1%, or 14.9% above the third quarter of 2019, with all divisions up over the two-year period. We were impressed with the 13.2% like-for-like growth in North Asia, given the resurgence of COVID-19 cases that led to another round of store closures and travel restrictions in China, Japan, and South Korea. Another highlight was L’Oreal’s ongoing outperformance across its categories, with growth for the company and the global category at 20% and 9%, respectively, for skincare, 15% and 9% for makeup, 12% and 7% for haircare, and 40% and 19% for fragrance. We attribute this outperformance to L’Oreal’s strong brand equities (which underpins its wide moat), the firm’s significant presence online (27% of sales), which protects it from store closures, and L’Oreal’s decision to maintain a high level of brand investments while many of its competitors pulled back during the pandemic.