China: The Scapegoat for Soft Performance? It’s become a common refrain at investor meetings: many beauty and luxury brands attribute their lackluster performance to the ongoing turmoil in China.
But is this narrative fully justified?
Yes, the beauty market in China is experiencing a slowdown. Both the spring and holiday peak seasons are shrinking, and overall annual growth is decelerating. However, it’s crucial to recognize that the Chinese beauty market continues to expand—albeit not necessarily through international or luxury brands.
A closer examination reveals that other regions are also softening, even as investor expectations remain elevated. For instance, L’Oréal reported a +3.4% growth in the third quarter on a like-for-like basis and a +6% increase year-to-date. These figures reflect solid growth compared to the anticipated inflation rate of 2.6% for G7 and advanced economies in 2024 and align with the global rate of 5.8% (according to IMF data). Yet, following this announcement, the company's share price dropped in the high single digits.
While it's clear that China's market dynamics play a role, the more significant challenge lies in managing investor expectations. As we navigate these turbulent waters, it’s essential to reassess our narratives and focus on long-term strategies.
#BeautyIndustry #LuxuryMarket #InvestorRelations #MarketTrends #ChinaBeauty #BusinessGrowth #L'Oreal #InvestorExpectations #MarketAnalysis
