L'Oreal hails 'lipstick effect' as economic turmoil drives sales growth
L’Oreal has seen its sales rebound thanks to a ‘lipstick effect’ on consumer confidence - sending shares soaring.The French firm - whose brands include Garnier, Maybelline and Essie - said sales rose 6.7 per cent to £10.6billion in its first quarter.Coined by rival beauty empire Estee Lauder, the ‘lipstick effect’ phrase is used to refer to women forking out on affordable luxuries like lipsticks and perfume when the economy is in dire straits - often instead of pricier purchases.L’Oreal chief executive Nicolas Hieronimus said: ‘Europe for me is the absolute demonstration of what we call the ‘lipstick effect’ or the dopamine effect of beauty.’ L'Oreal: The business has worked with influencers including Love Island star Mollie Mae (pictured).‘Even though consumers are worried and they have some preoccupations, they may cut on high-value items but they use beauty to compensate,’ Hieronimus added.The cosmetics giant said it had also benefited from a recovery of fortunes in the Chinese economy, which has helped boost consumer confidence after a slump.Regional sales in both its European and north Asian divisions increased by 5 per cent in the first quarter.Sales in the Middle East in the current quarter have been hit by the war, but it was expected to be a ‘manageable’ impact, the boss added.Its positive update sent shares up 8 per cent on the Paris stock market yesterday, striking a contrasting tone to the mood music from luxury companies this month.High-end giants LVMH, Hermes and Gucci owner Kering have warned of a decline in demand for luxury goods due to the war.But experts view L’Oreal as well-placed to cash in as its products are relatively affordable and it has a variety of brands. This means that cash-pressed consumers could trade down to cheaper companies in its portfolio.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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L'Oreal hails 'lipstick effect' as economic turmoil drives sales growth
