Downtown struggles mean travel retail “improving but remains negative” – L’Oréal CEO Nicolas Hieronimus : Moodie Davitt Report

The inter-related but contrasting fortunes of North Asian travel retail and the Mainland China local market were the subject of discussion on L’Oréal’s earnings call yesterday (21 October) following the French beauty house’s Q3 and nine-month results announced earlier (click here for our story).

CEO and Director Nicolas Hieronimus described the North Asia market in its entirety as “a mix of different situations”.

He said Mainland China (domestic) is “going in the right direction” with the market at +1% year-to-date after a flattish first half. L’Oréal’s Q3 performance was around +3%.

“I’m always very careful about China because one quarter doesn’t make a trend but overall, the market has gone into positive territory,” he commented, noting the best performance was coming from the group’s luxury beauty brands.

“We see slight uptick in consumer confidence. We see a stock market that has come back to the 2019 level, which is good for luxury consumers morale. But I wouldn’t get over excited because there are other macro-employment statistics that are not as positive,” Hieronimus continued.

Downturn doldrums, airport advancement

The Japanese market – boosted by strong Chinese and Korean tourism – was also in positive territory, he noted.

“Travel retail is improving a bit, but it remains in negative territory,” Hieronimus said. While North Asia travel retail was negative in single digits, he explained an important contrast between channels.

“As we commented in our last [H1] call, [there is] a significant difference between the downtown stores, which are double-digit negative and the airports, which are doing better. So travel retail is not positive.”

Soundbites – On the record with Nicolas Hieronimus*

On the acquisition of Creed from Kering: “House of Creed is a beautiful brand. It’s in the top three of the niche fragrances market, which happens to be the fastest-growing part of the fragrance market itself… and it happens to be a segment where we are just represented by the collection inside our couture brands. So we are under-represented and under-shared.”
On Paradigme by Prada and Miutine by Miu Miu: “I’m happy to report that both Paradigme from Prada and Miutine from Miu Miu are off to a very good start, both entering the top 10 in the market where they have been launched.”
On the Gucci fragrance licence (currently held by Coty): “As far as the Gucci licence, it belongs to Kering to comment on that. I’ve never mentioned the time line, but it seems that the market has a pretty clear view on it. We’re not privy of their discussions and it won’t be appropriate for me to discuss… we are patient, and we’ll wait.”
On whether a licenced brand such as Gucci will deteriorate as the holder’s tenure winds down: “We’ve had experiences in the past of taking over licences from other big groups. In the end, it has always gone well and these are brands that have passed the test of time. So I don’t think a couple of years can make a huge difference.”
On whether the fragrance cycle is slowing: “There are always some brands that, depending on their comparatives, have highs and lows, but our fragrances are doing great… yes it has slowed a bit but the fragrance market remains the fastest-growing category of beauty.”
On men’s fragrances: “What’s interesting is that men’s fragrances are right now growing faster than female, which reflects the entry in the market of multiple younger men and boys that are very excited about including Paradigme from Prada.”
On 2026 innovation: “Beauty has to play its role of bringing a smile on people’s faces and we have to do our job in tempting consumers with exciting stuff. We hadn’t been doing it enough in the prior year because probably there were tailwinds that were carrying the market. Now we have to carry the market, and we do it. We do it both through the launches that are being launched now and that will successfully carry over for next year. We have strong plans for 2026. So we want to keep that pace very clearly.”
On digital and ecommerce: “When we say the [total] market is growing a bit above +3%, probably the growth rate of ecommerce is more than twice that. Our ecommerce growth is at +12% right now and we are really doubling down on that because it allows us to reach new consumers, whether in India, in Saudi, in the USA or in China, where it’s the largest part of our business. And ecommerce also allows us to penetrate much faster with new products or continuing to animate the existing brand.”
On Yves Saint Laurent beauty vs Gucci Beauty: “I can confirm that Yves Saint Laurent is bigger in net sales than €2 billion. It’s actually not far from €3 billion. So it’s one of the successes we are the most proud of, and it’s entered the top 5 worldwide of luxury beauty… with great successes in fragrances and also particularly in makeup. As far as Gucci [Beauty], I don’t have the exact numbers and data of their sales, but we know it’s significantly smaller. And as a fashion brand, Gucci is bigger than Yves Saint Laurent. So in the long term, over the 50 years we are talking about – which is the term of the licences that we will get when available – there is indeed the potential for Gucci to… catch up with Saint Laurent.”* [Quotes from the L’Oréal Q3 2025 earnings call]

Hieronimus highlighted the recent appointment of highly regarded Eva Yu as L’Oréal Travel Retail President, replacing Emmanuel Goulin, who has been appointed to the key role of Europe President. Yu, currently President and Managing Director of L’Oréal Hong Kong, is the first Chinese woman to head the group’s travel retail business, he said.

Talking of groupwide performance, Hieronimus said the contribution from the company’s Beauty Stimulus plan had accelerated during the reporting period. New products included the latest fragrances, Paradigme by Prada and Miutine by Miu Miu, with both off to a good start (see panel above).

He said the group’s highlights included the gradual recovery in L’Oréal’s two largest markets, Mainland China (“where we clearly outpaced the market”) and the USA, where the Consumer Products Division gained market share in each of its categories for the first time since 2021, proving that innovation really is a “game changer in beauty”.

Hair Care & Fragrances, collectively representing 30% of group sales performed well as, encouragingly, did makeup, where L’Oréal grew almost 3x above the market.

Continued dynamism in ecommerce plays to L’Oréal’s strength, enabling the company to outperform what Hieronimus described as the fastest-growing channel (story continues below the panel that follows).

(Kering) Beauté is in the eyes of the beholder

Unsurprisingly, Hieronimus dedicated much attention to L’Oréal’s acquisition, announced Sunday night, of Kering Beauté, including the Creed niche fragrance brand as well as the beauty & fragrances licences of Balenciaga, Bottega Veneta and, “when available”, Gucci.

“I’m extremely excited about this transaction. Not only does it cement our existing leadership in luxury beauty, I also see enormous potential for each one of these four brands and we have proved our ability to turn licences into billionaires,” he commented.

“Today, YSL is as big in beauty as it is in fashion. Prada crossed the €500 million mark just four years after joining the L’Oréal Luxe family. The future is now good, and I look forward to writing this new chapter. And I’m truly delighted to do it with Kering, a trusted partner for more than a decade and a half.” ✈

Downturn doldrums, airport advancement

Soundbites – On the record with Nicolas Hieronimus*

(Kering) Beauté is in the eyes of the beholder

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