Despite record inflation, recession fears and rising interest rates, the beauty industry is cautiously optimistic about a successful US holiday season.
As has been seen in previous recessions, such as the 2008 financial crisis, while there has been a drop in trade, generally no one leaves beauty, and so far no evidence of a drop in trade has yet been reported by major beauty companies, with the booming prestige sector.
“Looking ahead, we see some, but not many, downside risks for the beauty segment; in fact, we think the category will be one of the winners during the lucrative holiday period,” said Neil Saunders, managing director of GlobalData.
He noted that while the “lipstick effect,” the theory coined by beauty mogul Leonard A. Lauder that beauty product sales rise during tough economic times, sounds like a cliché, it is based on a truth that remains relevant. “In other words, consumers are very reluctant to give up small pleasures and beauty pleasures and, in fact, feel that these are well-deserved rewards for living through a more difficult time. Indulgences aside, it’s also the case that many beauty and skincare routines are so ingrained in people’s lives that there is a great reluctance to cut back on any of the products associated with them.”
Olivia Tong, an analyst at Raymond James, added that retailers generally appear to be optimistic about the holiday season, but are being cautious in some of their guidance as “it’s not the easiest of times right now.”
As for the companies themselves, the executive vice president and chief financial officer of Estée Lauder Cos. Inc., Tracey Travis, told WWD, “We’re feeling really good heading into the holiday season,” adding that there will be some great holiday sales and promotions. gift sets
Its recent full-year sales forecast was below analyst estimates, but much of that was due to the COVID-19 lockdowns in China.
Ulta Beauty, meanwhile, raised its outlook for fiscal 2022, now expecting net sales in the region of $9.65 billion to $9.75 billion, up from $9.35 billion to $9. 55 billion. Diluted earnings per share are expected to be $20.70 to $21.20, up from $19.20 to $20.10.
However, the company noted that it expects the environment to be more competitive and more promotional this holiday season than it was last year.
During a call with analysts, CEO Dave Kimbell said: “As we look ahead, we know there will be challenges, particularly with the broad impact of rising inflation, both on our business and our guests. But we remain confident in the resilience of the beauty category and our ability to lead the beauty category and drive long-term profitable growth.”
Source: wwd.com