"Lipstick Effect" Truly Works in Sales

Photo: notino.pl

L’Oréal, the world's largest cosmetics manufacturer, reported its highest quarterly sales in two years. According to the report, the French cosmetic group's revenue in the first quarter of 2026 amounted to 12.2 billion euros — an increase of 6.7% compared to the same period last year, based on comparable figures.

The result surpassed analysts' forecasts. Following the report, shares of L’Oréal, which owns brands like Maybelline and Lancôme, rose by 8.5% at the start of trading last Thursday, April 23.

As noted, Europe was the main growth driver, where a sales increase of 10.3% was recorded.

The company attributes this to the so-called "lipstick effect," where, amidst crises and war, consumers continue to buy relatively inexpensive goods to improve their personal well-being.

"For me, Europe is the absolute confirmation of what we call the 'lipstick effect' or the dopamine beauty effect. Our consumer behavior research clearly shows: despite concerns and certain anxieties, people may cut spending on expensive, significant outlays, but they use cosmetics as a form of compensation — as a means to cope with stress and as psychological support. And we observe this across various categories," The Times quotes L’Oréal CEO Nicolas Hieronimus.

At the same time, as the company head noted, there have been "absolutely no changes" in consumption patterns so far, despite rising oil prices and global market turbulence caused by the conflict in the Middle East. He did not rule out, however, that if high logistics and raw material costs, including plastic, persist, the company might need to raise prices later this year.

Barclays analysts called the company's underlying growth "very impressive." According to their data, the professional cosmetics and dermatological care segments showed the best results, with premium hair care products and perfumes being the main growth drivers.

An additional boost for optimism was that the world's largest cosmetic group reported signs of recovery in the Chinese market. The latter had long been experiencing a slowdown due to ongoing economic uncertainty and changing consumer habits in the region.

The company warns that the conflict in the Middle East may affect results in the second quarter, but since this region accounts for less than 3% of total revenue, the impact is expected to be limited.

L’Oréal's strong results contrast with the weaker performance of other consumer companies and luxury groups, such as LVMH, Kering (owner of Gucci), and Hermès (manufacturer of Birkin bags), whose growth in the first quarter was undermined by the conflict in the Middle East.

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