Analyst Note| Rebecca Scheuneman, CFA |
In its first quarter of fiscal 2021, L’Oreal reported 10.2% like-for-like sales growth and 5.4% total sales growth when accounting for currency headwinds. L’Oreal’s double-digit growth was boosted by the lapping of last year’s 4.8% like-for-like sales drop, when the beauty market was impaired by initial closures of beauty salons, department stores, perfumeries, and travel retail outlets across the globe. Given the company’s strong brands (which underpins its wide moat rating), L’Oreal significantly outperformed the global beauty market, which continues to be hindered by store closures in several regions, most notably in Europe, Latin America, Japan, and other regions throughout Asia. But L’Oreal’s significant online presence (with 27% of the quarter’s sales stemming from e-commerce) helped overcome these barriers, with online sales growing 47% year over year during the quarter.