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Changes for the Beauty Industry



Quarantine Upends Routines


Quarantine has caused many to forgo normal makeup, hair-care, and skin-care regimens. Products that used to be integral parts of people’s daily routines are sitting unused in bathroom cabinets, and the companies that make these products are feeling strained.

Estée Lauder (EL), which manages Clinique, MAC Cosmetics, and other brands, has seen its stock fall by 20% since mid-February. The cosmetics maker e.l.f. (ELF) has seen a 40% drop in its stock. Similarly, sales of more up-market products from Ulta Beauty and Sephora, both owned by LVMH (LVMHF), have seen sales sink by 14%.

The pandemic has accelerated a downward trend in demand for makeup that has been evident since 2017. Makeup sales hit record highs three years ago as YouTube (GOOGL) and Instagram (FB) tutorials boomed and customers flocked to buy rainbow eye-shadow and contouring kits. In recent years, however, demand has shifted away from flashy makeup and towards skincare products.

Since quarantines set in, sales of skincare products have outpaced makeup sales for the first time in history, according to market research firm NPD group. Skincare could be the saving grace of companies like L’Oréal (LRLCY), which has seen sales of its makeup brands like Maybelline plummet, but has seen a rise in sales of skincare products like
Kiehl’s and CeraVe.

A Slow Road to Recovery for Salons


Shifts in consumer habits are sending shockwaves all the way to the top of the beauty industry. The hair and nail care superpower, Coty Inc. (COTY), which owns OPI, Wella, a majority stake in Kylie Cosmetics, and other brands, announced that it will sell roughly 60% of its business to KKR & Co Inc. (KKR) for an enterprise value of $4.3 billion. Earlier this year, the portfolio was valued at $7 billion. This drop in valuation illustrates the beauty industry’s distress.

Nail salons, hairdressers, and other commercial beauty businesses have been shuttered due to coronavirus. This means that Coty, and other companies that supply salons, have suffered. Beauty supply brands have been banking on a rush of customers returning to salons once lockdowns ease, but so far, business has been slower to trickle back than expected.

Social distancing regulations mean that salons cannot be filled to their normal capacity. Additionally, during quarantine, many have resorted to DIY haircare and are sticking to newly formed habits. Sales of at-home hair dyes rose sixfold during lockdowns. It is likely that some people will continue dying and even cutting their own hair in the months ahead—both to save money and because of public health concerns.

Looking Ahead: Face Mask Fashion and Redefining Beauty


Just like many industries, beauty companies are facing an uncertain future. Some have speculated that if masks continue to be fixtures of people’s wardrobes, sales of products for eyes and eyebrows could gain traction, while sales of lipstick and blush could wane. Other analysts note that a recession could cause a “lipstick effect.” This is a term that economists and psychologists use to describe how, when a recession hits, people buy fewer high-priced luxury items like cars and clothing, and demand rises for smaller items that still feel indulgent, like designer lipstick.

If working from home continues, makeup sales may not bounce back to pre-pandemic levels. However, as people settle into new routines, they may turn to skincare and wellness products as a way to maintain normalcy.

While working from home, it can be helpful to figure out what habits help you to feel your best. Putting on lipstick, changing out of pajamas, or even washing your face can help separate work time from non-work time. As Kathleen Hou, Beauty Editor at The Cut explained , “Obviously this is not a normal time right now…but I think it’s a good time to redefine what beauty means to you.”


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