Despite depressed sales early in the year, consumer confidence seems to be steadying, financial markets are firming and the Asian SARS panic is easing. Top executives are feeling less anxious about the second half, although no one expects to be dancing in the street on Christmas Day.
“I do feel better about the U.S. market for the second half,” said Fred Langhammer, president and chief executive officer of Estée Lauder Cos. He sees particular bright spots in color cosmetics, treatment and hair care, but the fragrance market remains weak, despite plans for about 50 launches worldwide. Overall, Langhammer pointed out that for the last 13 weeks, the prestige market in the U.S. has markedly outperformed mass beauty in terms of color and skin care.
Looking at the rest of the world, Langhammer said Japan remains difficult, but Asia shows signs of coming back. He doesn’t expect travel retail to rebound fully until the first half of next year. Europe continues to be soft, primarily due to the weakness in core markets of Germany, France and the Benelux countries. The southern circuit — including Spain, Italy and Greece — is doing well, as is the U.K.
L’Oréal, the world’s largest beauty firm, remains bullish on its yearend results after reporting on Thursday a 3.2 percent decline in first-half sales to $8.1 billion. But on a like-for-like basis, sales rose 7.1 percent. L’Oréal’s confidence is based on expectations of moderating exchange rates and sustained organic sales growth. Yearend income, excluding extraordinary items, is expected to grow at a double-digit pace.
“Thanks to these extremely encouraging figures, obtained in the most difficult conditions, L’Oréal should be able to achieve its traditional objective of like-for-like sales growth of between 7 and 9 percent per annum,” said Lindsay Owen-Jones,chairman and ceo, in a statement.
“Despite the overall sluggishness of the market, our business has performed well this year,” said Bernd Beetz, ceo of Coty Inc. “We have had solid market growth in both the mass and selective divisions, which makes us very optimistic for the second half. We are especially encouraged by the success of our launches earlier this year, including Davidoff Echo, Celine Dion Parfums, Adidas Adrenaline, Rimmel’s Sheer Brilliance Lipstick and Mary-Kate and Ashley fragrances, and we have strong expectations for the launches planned later this fall.”