From H1 Struggles to Q3 Growth: Key Trends Shaping the Beauty Industry
The third quarter of calendar year 2025 has offered encouraging signs for the global beauty industry. After a challenging first half, during which the aggregate growth of the top ten companies we track was negative (-0.7% YoY), Q3 delivered a notable improvement, with the combined growth rising to +1.8% year-on-year. This shift reflects not only a stabilization of market conditions but also the impact of strategic initiatives, targeted portfolio adjustments, and channel diversification among leading players.
L’Oréal, the largest company in the group with quarterly revenues of approximately €10.33 billion, achieved like-for-like growth of roughly 4.2% (+0.5% reported). All divisions contributed to growth, with Professional Products and Dermatological Beauty leading at +6.1% and +1.1%, respectively. While the China/North Asia region returned to positive like-for-like growth for the first time in two years, reported growth was primarily supported by Europe (+4.6%) and SAPMENA-SSA (+5.7%). E-commerce continues to be a strong driver, posting nearly 12% growth. For L’Oréal, the recovery is being propelled by a combination of geographic diversification, robust digital channels, and a balanced portfolio, rather than reliance on mass-market segments. This highlights the strategic resilience of the company’s professional and dermatological offerings amid regional fluctuations.
Among smaller, agile players, e.l.f. Beauty demonstrated remarkable momentum, with fiscal Q3 net sales rising approximately 14% to US$344 million. The company’s growth is anchored in market share gains within color cosmetics and effective execution across both online and physical retail channels. e.l.f.’s performance underscores the advantage of focused, niche strategies: specialized offerings combined with digital-first approaches can yield disproportionate gains, even in a market dominated by much larger conglomerates.
Unilever’s Beauty & Well-Being division also posted strong results, accelerating to 5.1% growth for the quarter, driven by both volume (2.3%) and price increases (2.7%). Key brands such as Dove in haircare and Vaseline in premium body care contributed significantly. The results suggest that Unilever’s performance is increasingly supported by premiumized personal-care brands and a balanced volume/price mix, rather than purely mass-market, low-price growth. Innovation and brand relevance continue to be central to sustaining momentum in competitive categories.
The Estée Lauder Companies experienced a mixed but generally positive quarter, with net sales rising 3.6% to US$3.5 billion. Growth in Mainland China was particularly notable, driven by strong performance across brands such as La Mer, Le Labo, and TOM FORD, and supported by both brick-and-mortar and online channels. Within the Estée Lauder brand, market share gains were achieved across Skin Care, Makeup, and Fragrance for the third consecutive quarter. Skin Care grew 3%, led by La Mer and Estée Lauder, while Makeup declined slightly by 2%, primarily due to Bobbi Brown, reflecting strategic reductions in product offerings and a high prior-year launch comparison. Fragrance surged 13%, propelled by Luxury Brands across all regions, whereas Hair Care declined 7%, mainly driven by Aveda, reflecting planned reductions in online promotions and exits from underperforming retail doors. Estée Lauder’s results demonstrate how strategic brand management and targeted portfolio adjustments can sustain growth amid uneven category performance.
Coty Inc. faced continued challenges in Q3, reporting net revenue of US$1,577 million, down 6% on a reported basis. The Prestige segment, representing 68% of total sales, declined 4% reported and 6% like-for-like, affected by inventory adjustments in prestige fragrances and weaker makeup and skincare sales. The Consumer Beauty segment, representing 32% of total sales, fell 9% due to broad weakness in Europe and trade destocking in mass fragrances. Coty’s results highlight the vulnerability of legacy mass-color and fragrance segments in a market where consumer preferences are shifting and indicate the necessity of restructuring and refocusing to restore growth momentum.
Puig Group delivered robust calendar Q3 results, with revenues of ~€1.30 billion (US$1.5 billion) and like-for-like growth of ~6.1%. The makeup segment performed exceptionally, surging 18.8% like-for-like (~€230 million), fueled by Charlotte Tilbury and strong engagement on Amazon US. The Fragrance & Fashion segment, which represents 73% of total revenue, grew modestly at 2.8%. Asia Pacific emerged as a significant growth engine, posting like-for-like growth of 35.8%. Puig’s results illustrate the value of diversified portfolios and regional execution, where growth is increasingly driven by makeup and skincare while fragrance provides a stable base.
Interparfums Inc. posted net sales of US$430 million, up 1.3% year-on-year, while net income increased 6% to approximately US$66 million, reflecting strong margin discipline. Despite moderate volume growth internationally, brand innovation and e-commerce remain active contributors. Interparfums’ performance indicates that the fragrance licensing model remains resilient but faces modest growth pressure, requiring careful brand and channel management to sustain performance.
Amore Pacific Corporation reported Q3 revenue of KRW 1.016 trillion (US$820 million) and net income of KRW 68.2 billion, up from KRW 37.2 billion a year earlier. Growth was supported by strong performance in online and travel retail channels, benefiting from increased inbound travel. In Asia, expansion followed last year’s restructuring in China, while the Western region grew through reinforced brand presence and channel diversification for recently launched products. The company’s results highlight the impact of channel optimization and regional adaptation on overall growth.
Shiseido rebounded strongly after a soft first half (-4.1% YoY), posting +4.6% growth in Q3. Weakness in travel retail and the decline in Drunk Elephant sales had subsided, while key brands and innovations accelerated performance. In the Americas, the company is entering a new growth phase via the Drunk Elephant turnaround plan, innovation, distribution expansion, and synergies with the EMEA region under a shared CEO. Shiseido’s results demonstrate how strategic brand revitalization and cross-regional integration can reignite growth after a period of underperformance.
Finally, Beiersdorf AG reported Q3 Group sales of approximately €2.35 billion, reflecting organic growth of 1.7% (-0.9% reported). The Derma segment (including Eucerin and Aquaphor) saw strong organic growth of 12.3%, while the flagship NIVEA brand grew only 0.6%, indicating continued pressure in mass-market skincare. Regionally, Europe delivered 1.8% organic growth, while the Americas declined 1.9%. Beiersdorf’s results highlight the importance of innovation and targeted brand focus in offsetting slower growth in mature, mass-market categories.
Key Market Takeaways
Overall, Q3 2025 demonstrates a gradual but tangible recovery for the beauty industry, signaling a clear shift from the first half of the year, when many companies struggled with weak demand, regional disruptions, and lingering effects from prior restructuring or market headwinds. Across the top ten players, we see that positive growth is returning, although the pace and drivers vary significantly depending on company strategy, segment focus, and regional execution. The quarter highlights that while the beauty market is improving, it is far from uniform, and the success of individual companies is increasingly determined by their agility, innovation, and ability to leverage specific channels and geographies.
1. Niche and agile players outperform larger conglomerates in percentage growth. Companies like e.l.f. Beauty and Shiseido demonstrate that smaller, focused operators can achieve outsized growth relative to their size. e.l.f., for instance, posted 14.2% growth in Q3, reflecting its sharp focus on color cosmetics, a strong digital presence, and nimble retail execution. Shiseido’s 8.5% growth similarly illustrates the benefits of carefully executed brand revitalization, innovative launches, and channel expansion after a weaker first half. These cases highlight a broader trend in the market: flexibility, targeted portfolios, and the ability to respond quickly to evolving consumer preferences are becoming decisive competitive advantages, particularly in specialized or premium segments.
2. Large, diversified companies maintain moderate but stable growth. Conglomerates such as L’Oréal and Unilever show more measured growth rates, reflecting both the benefits and the constraints of scale. While their revenues are enormous (L’Oréal alone generated over €11 billion in Q3) the percentage growth is comparatively modest (+0.5% for L’Oréal, +5.1% for Unilever). Their performance underscores the principle that scale brings stability and diversification but can limit the pace of percentage growth. These companies rely on portfolio breadth, regional balance, and channel optimization rather than rapid, single-category gains. For instance, L’Oréal’s performance benefited from strong e-commerce and Professional and Dermatological Beauty divisions, rather than mass-market segments, illustrating how mature, diversified players must leverage multiple levers simultaneously to sustain growth.
3. Channel and regional execution are critical performance drivers. Across the board, e-commerce, travel retail, and Asia-Pacific markets continue to play a decisive role in shaping outcomes. Brands with strong digital and omnichannel capabilities, like e.l.f. and Shiseido, outperformed in markets where physical footfall was limited or where premium online demand surged. Travel retail, which had been under pressure in previous quarters, showed early signs of recovery, benefiting companies such as Amore Pacific and Shiseido, which leveraged inbound tourism and expanded distribution. Regionally, Europe and North America continue to provide stability, while Asia (particularly China and broader North Asia) remains variable but shows improving momentum, as evidenced by L’Oréal’s return to positive like-for-like growth in the region. These dynamics reinforce that channel strategy and geographic focus are increasingly decisive in determining whether companies outperform or lag behind.
4. Premiumized, innovation-led segments outperform mass-market and legacy categories. Q3 highlights a continuing segmentation trend, where high-value, innovation-driven products are gaining share at the expense of traditional mass-market offerings. Color cosmetics, luxury fragrances, and dermatological skincare have emerged as consistent growth engines. e.l.f.’s focus on color cosmetics, Puig’s growth in makeup through Charlotte Tilbury, and Beiersdorf’s Derma segment all illustrate how consumer demand favors products that are either premium, innovative, or differentiated in a meaningful way. Conversely, legacy mass-market skincare and fragrance categories, particularly within Coty and NIVEA, remain under pressure, highlighting the structural challenges facing large, traditional brands. The pattern suggests that companies that prioritize R&D, premiumization, and high-value segments are better positioned to capture market share and sustain growth in the evolving landscape.
5. Strategic turnarounds and brand revitalizations are effective. Several companies demonstrate that well-planned turnaround initiatives and brand reinvigoration programs can reverse previous declines. Shiseido’s turnaround with Drunk Elephant, Estée Lauder’s selective SKU rationalization, and Coty’s restructuring efforts illustrate how combining innovation, portfolio optimization, and cross-regional synergies can restore growth momentum. These examples highlight that while organic market recovery is important, strategic interventions and active management of underperforming categories or brands remain critical tools for sustaining long-term performance.
6. The market is becoming increasingly differentiated. Taken together, Q3 2025 reinforces that the beauty industry is not a monolithic market. Companies face varying pressures depending on size, portfolio composition, channels, and regional exposure. While mass-market and legacy segments continue to struggle, players that successfully blend premiumization, innovation, channel optimization, and geographic diversification are able to capture outsized growth and outperform peers. In practice, this means that future market success will rely less on overall market expansion and more on strategic execution, consumer insight, and the ability to adapt quickly to changing demand patterns.
In conclusion, Q3 2025 illustrates a beauty market that is resilient yet uneven, recovering from the headwinds of the first half of the year. Growth is returning, but its distribution is far from uniform. Companies that are agile, innovation-focused, and strategically aligned across regions and channels are emerging as winners, while legacy mass-market players face ongoing pressure. Looking forward, the combination of premiumization, targeted channel development, and selective geographic expansion will be the primary levers enabling leading companies to capture the next phase of growth in a market that rewards focus, execution, and adaptability.
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