HBW Insight is part of Pharma Intelligence UK Limited

This site is operated by Pharma Intelligence UK Limited, a company registered in England and Wales with company number 13787459 whose registered office is 5 Howick Place, London SW1P 1WG. The Pharma Intelligence group is owned by Caerus Topco S.à r.l. and all copyright resides with the group.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By


‘Lipstick Effect’ Put To Test: Top Beauty And Ingredient Supplier Execs On 2022 Volatility

Executive Summary

Optimism varies across leading beauty and personal-care companies amid continuing cost, currency and geopolitical headwinds. HBW Insight provides takes from leaders at L’Oréal, The Estee Lauder Companies, Coty, Ulta, P&G and more in recent sales and earnings presentations.

The “lipstick effect” has been a prevalent theme in recent sales and earnings calls of leading cosmetics and personal-care manufacturers, retailers and suppliers.

Yes, consumers historically have indulged in cosmetic purchases as affordable luxuries even during economic downturns. But how much faith can companies place in this precedent?

Here we’ve highlighted commentary from top execs on macroeconomic pressures and the state of the market following a tumultuous 2022 first half.

David Kimbell, CEO at Ulta Beauty, Inc.

David Kimbell

CEO at Ulta Beauty, Inc.

We recognize beauty is not immune to macroeconomic challenges, but the category's deep emotional connection has historically resulted in stronger resilience compared to other discretionary categories. And as our results illustrate, we believe this is even more true today given the importance of self-care and wellness. …

We're seeing strong growth across all aspects of our business. As I mentioned, every category performed in double-digits – strength across channels, stores, e-comm, services. And as we look at income levels of our guests, we're seeing healthy growth at all income levels.

So no real signs or signals of trade-down within the marketplace yet. And again, I think that's a reflection of the importance that this category plays in our guests’ lives – the increasing connection that beauty has, wellness, and the desire of our guests to express themselves to the world in this as the world reopens.

25 August 2022

Read about Ulta’s nearly 19% increase in net sales to $4.6bn in the fiscal 2022 first half.

Nicolas Hieronimus, CEO at L’Oréal

Nicolas Hieronimus

CEO at L’Oréal SA

Looking at the second half [of the year], we are both prepared and bullish – prepared, because we are conscious of the high level of uncertainty and volatility of the economic current outlook of the fears of recession, of the potential impact of inflation on consumption, and of the continuation of tensions on supply chain. …

Over the past decade, the global beauty market has grown by 4%, 5% per year. The beauty market also has a long track record of withstanding periods of economic difficulties. As you know, according to the Lipstick Index Theory, even in hard times, people want to indulge themselves and beauty is the most affordable and one of the easiest ways to do so. …

In the current context, we are prepared for the worst, but we are planning for the best, as we very well know that playing offense is what drives consumption, market share gains and growth. We are stronger today than before COVID, and our balanced model constitutes the best vaccine in a VUCA world.

28 July 2022

Read about L’Oréal’s Q2 results propelled by performance in China despite COVID-19 lockdowns.

Laurent Mercier, CFO at Coty, Inc.

Laurent Mercier

CFO at Coty, Inc.

Both inflation and supply chain remain very dynamic, require daily monitoring and adjustments by the Coty teams. While we continue to be impacted by select component constraints, the situation for many of these components remains largely stable relative to the last update we provided in May. We continued to manage the situation relatively well, utilizing safety stocks, alternate materials, and dual sourcing to navigate the environment. …

On the inflation side, as we had anticipated, inflationary pressures on [cost of goods sold] stepped up in Q4 to just over 2% of revenues. And while we have seen pricing for certain materials ease in recent months, the expected COGS inflation is currently anticipated to remain at over 2% in fiscal 2023. We have of course been actively preparing for this scenario.

25 August 2022

Read why Coty deems itself “advantaged" in today’s challenging climate.

Tracey Travis, CFO at The Estee Lauder Companies, Inc.

Tracey Travis

CFO at The Estee Lauder Companies, Inc.

Looking ahead to fiscal 2023, we believe that the prestige beauty category has ample opportunities for continued strong growth. Global prestige beauty is expected to grow mid to high single digits, driven by the continued recovery and the gradual reopening of the remaining markets impacted by COVID restrictions. Additionally, we look forward to the continued resumption of international travel especially in Hainan and the rest of Asia.

We are concerned, however, that the recovery this fiscal year will once again not be a smooth one. Record inflation and the threat of recession or slowdown in many markets could temporarily dampen consumer enthusiasm and is causing some retailers to be more cautious regarding inventories. The strengthening dollar is putting pressure on international earnings. Additionally, heightened geopolitical tensions could prove to be disruptive.

18 August 2022

Read more on ELC’s outlook for coming fiscal quarters.

Tarang Amin, CEO at E.l.f. Beauty, Inc.

Tarang Amin

CEO at e.l.f. Beauty, Inc.

Looking ahead, the environment continues to be dynamic. While it's difficult to forecast how inflation or recession may impact consumer behavior, we believe cosmetics continues to be an important category for self-expression. Mass cosmetics in particular has performed better than prestige in past recessionary times. … We see the current backdrop as a time to reinforce our unique value proposition.

3 August 2022

Read how E.l.f. achieved net sales growth of 26% to $122.6m in its fiscal 2023 first quarter.

Jon Moeller

Jon Moeller

CEO at Procter & Gamble, Co.

The operational cost and currency challenges we faced over the last two years will continue in fiscal 2023. …

Pricing generally comes with a level of elasticity. Consumers don’t leave the category, but they might look at their dosing behaviors. They might look a little bit closer at their inventories and draw that down over a period of time, specifically as they’re more exposed to inflation broadly in the marketplace. With this highest inflation in 40 years, it would be naïve to assume the consumer is not looking at their cash outlay and their spending, even in our categories. Though we see the elasticities be more favorable than historical norms to date, we continue our assumption that they return to historical elasticities going forward.

29 July 2022

Read about the unprecedented challenges facing P&G in its new fiscal year.

Astrid Hermann, CFO at Beiersdorf

Astrid Hermann

CFO at Beiersdorf AG

In terms of recession risk, everyone knows kind of the same in terms of, obviously, what we read and what we see. We have a good portfolio of brands that we feel cover us well in recessionary times. We have opportunities within our portfolios, even within our brands, for example, if [consumers] have to down-trade. … But this is obviously a big question mark. No one can really tell what the future will hold. …

There is a high level of volatility and we see a variety of potential risk going into the second half. One, ongoing supply disruption and the lingering risk from potential gas shortages. Two, inflation seems to remain on a very high level and continued pricing could have an impact on consumer purchasing behavior. And three, the COVID pandemic, which is not yet over, and its further development, which is impossible to predict. Despite these headwinds, we are confident to arrive at our ambitious guidance for the year.

4 August 2022

Read why Beiersdorf is projecting a slowdown despite optimism about China recovery, sun-care success and other positives.

Glenn Robert Richter, CFO at International Flavors & Fragrances, Inc.

Glenn Richter

CFO at International Flavors & Fragrances, Inc.

While we are reconfirming our outlook, we also are increasingly cautious on the overall market environment outlook as we navigate continued foreign exchange fluctuations, ongoing inflation, and potentially recessionary pressures. We expect to achieve our sales targets through pricing actions, as we press ahead toward full dollar cost recovery. ...

As always, we remain laser focused on mitigating the many macroeconomic challenges with an emphasis on controlling what we can control during these uncertain times, notably focusing on pricing execution and productivity.

8 August 2022

Read about IFF’s innovation pipeline in 2022.

Giles Andrier, CEO at Givaudan

Giles Andrier

CEO at Givaudan

Given the current challenges around energy supply, notably in Europe, we are planning for business continuity in order to ensure the right adaptability of our production setup. In operations, our focus lies on maintaining operations and supply chain performance at high levels to support our customers and then the continued cost discipline throughout the business.

21 July 2022

Read why Givaudan is bracing for regulatory changes under the EU’s Green Deal.

Related Content


Latest Headlines
See All



Ask The Analyst

Ask the Analyst is free for subscribers.  Submit your question and one of our analysts will be in touch.

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts