In the face of a beauty industry downturn signaled by Ulta’s CEO, LVMH’s recent earnings report paints a contrasting picture of resilience and growth, particularly within its Sephora brand and perfume and cosmetics sector.
- Sephora’s Sparkle: Despite a general dip in luxury demand, Sephora stood out with remarkable growth, especially in North America, Europe, and the Middle East. The brand’s expansion into China and the introduction of sustainability initiatives like “Clean at Sephora” and “Planet Aware at Sephora” seals have further solidified its market presence.
- Perfume and Cosmetics Glow: The perfumes and cosmetics category saw a 7% growth year-over-year, with skincare, makeup, and fragrances from Dior, Givenchy, Guerlain, and Kenzo leading the charge. New product launches from Benefit and Make Up For Ever, along with Fenty Beauty’s foray into China, contributed to this success1.
- Selective Retailing Success: LVMH’s Selective Retailing division experienced an 11% revenue increase, driven by Sephora’s performance. The partnership with Kohl’s has been particularly lucrative, with sales surpassing $1.4 billion in 2023 and expectations to exceed $2 billion by 20252.
- Ulta’s Caution: This positive outlook comes after Ulta’s CEO Dave Kimbell warned of a cooling in beauty demand. While Ulta anticipated a moderation in sales, the actual slowdown was more pronounced than expected, challenging their market share of prestige beauty.
In summary, LVMH’s earnings report highlights the strength and potential of Sephora and its perfume and cosmetics division, even as competitors like Ulta face headwinds in the market. The strategic moves by Sephora, such as its sustainable product lines and successful partnerships, are setting a robust example for the industry during uncertain times.
