L’Oreal could avoid the worst of the tariff war with the U.S., the beauty giant’s CEO Nicolas Hieronimus, told CNBC, warning that the price impact could still hit consumers
Hieronimus said he is “not overly concerned” over the impact of White House tariffs on L’Oreal, as the group produces most of its goods sold in the U.S. in the North American country. Some of the cosmetics titan’s luxury products, such as fragrances, are nevertheless exported from Europe.
“Right now, there’s no tariff on this category,” he said. “Should there be one? Well, we will work around it. There’s pricing power. There’s also the currency effect. The dollar is stronger.”
He added that tariffs are manageable “as long as it doesn’t become a global tit for tat”.
His comments come after President Trump imposed 25% tariffs on Canadian and Mexican imports and 10% levies on Chinese goods, in a bid to lessen the U.S.’ trade deficit with counterparties. Washington has also threatened imposing duties on Europe.
Performance
L’Oreal, which owns brands such as Maybelline, Garnier and La Roche-Posay, overall outperformed in 2024 in what it described as a ‘normalizing beauty market.’ The company nevertheless missed expectations in the final quarter, when like-for-like sales were up 2.5%, in a slowdown from the previous quarter.
Fourth-quarter sales in the U.S. were soft, failing to make up for a continued downturn in China. But Hieronimus is upbeat about the growth prospects in North America this year.
“I think the fundamentals of the economy are there,” he said. “We only have 13% market share, so it’s not just about market growth. It’s about a capacity to conquer new consumers.”
Resilient in Europe
L’Oreal’s performance in Europe has meanwhile stayed strong. The region was the largest contributor to growth last year, with like-for-like sales up 8.2%.
Yet Hieronimus says the EU remains too focused on regulation and not enough on innovation.
“My belief and hope, and that’s what I perceive today when I meet European politicians, is that the new Trump administration and their focus on competitiveness will be the real push that was needed.”
China has been a growth engine for L’Oreal and many luxury players for several years, but demand has taken a hit from a range of factors – a corruption crackdown, the Covid-19 pandemic, inflationary pressures and slowing domestic demand, along with a recent global geopolitical upheaval.
Uncertainty surrounding the Chinese landscape could linger for some time, Hieronimus says.
He does not expect 2025 to show much demand improvement in China, but says there’s light at the end of the tunnel. “I’m confident,” he said. “I don’t see this year being a big change versus last year, but I think we will see good news from China in the months and years to come.”
L’Oreal, the world’s largest beauty company, both by revenue and market capitalization, has been facing mounting competition on multiple fronts – from large luxury groups like Hermes or Kering starting their own beauty divisions, to smaller social media-savvy startups.
Hieronimus is putting his bets on innovation “Every year, 10 to 15% of our business comes from new products, and you have constantly to surprise and delight the consumer. People don’t tell you that they need a new glossy lipstick or a new hair color that shines. They need to be stimulated. The demand needs to be stimulated by innovation.”
After buying a 10% stake in injectable beauty specialist Galderma, L’Oreal said it had taken a position in clinics in North America and China to learn more about the aesthetics market. It will decide on whether to invest further at a later time, Hieronimus said, noting “it’s important for L’Oreal to learn, observe and then make up its mind”.
The company is expected to make announcements on nutricosmetics this year.
Correction: This article has been updated to more accurately reflect the extent of L’Oreal’s market share in North America.
