The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Online beauty sales in China last month surged by 58 percent year over year, according to Bernstein, providing a counterpoint to a stream of sobering earnings from global brands that have struggled there of late.
Major beauty firms including Estee Lauder, Shiseido, and L’Oreal, this month had all reported a softening of sentiment in the Chinese market. Japanese cosmetics makers in particular have been grappling with Chinese consumer fears and a boycott over the release of treated wastewater from a nuclear plant in Fukushima.
Bernstein’s measure of online beauty sales, which mostly strips out the idiosyncracies of the massive duty free market in China, can provide a clearer look into true Chinese beauty shopper sentiment. The country’s main duty free hub Hainan is on a protracted slump digesting regulatory changes made last year that impacted the daigou market and a higher propensity for Chinese shoppers to buy internationally with travel now more accessible.
L’Oréal in particular saw exceptional performance for Chinese e-commerce, Bernstein noted. Its topline grew by 56 percent in January, driven by strong results at its top luxury brands, Lancôme and Kiehl’s. LVMH ‘s beauty division grew by 47 percent, Shiseido 36 percent, Estee Lauder 19 percent, and local player Proya 110 percent.
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Still, concerns surround the overall recovery of the Chinese consumer. Last week, it was revealed that China’s consumer price index in January fell 0.8 percent year over year, the fastest annual drop in 15 years, inflaming deflationary fears. It was the fourth straight month of decline.
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China’s Consumer Slump Claims Another Victim as Shiseido Profit Slides
Weak consumer spending has also hit profits at L’Oréal and Estée Lauder.
With consumers tightening their belts in China, the battle between global fast fashion brands and local high street giants has intensified.
Investors are bracing for a steep slowdown in luxury sales when luxury companies report their first quarter results, reflecting lacklustre Chinese demand.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.