L’Oreal to close some US luxury stores, cut 400 jobs

The beauty brand plans to shift investment to growth areas such as e-commerce as part of a restructuring

L'Oreal, which employs about 88,000 people worldwide, has been struggling through the coronavirus pandemic as people around the world are spending less on pricey perfumes and makeup. Photographer: ChrShow more

L’Oreal plans to close retail locations to restructure its US luxury operations as the company grapples with severe changes to consumer behaviour amid the pandemic.

The luxe division of L’Oreal USA plans to shift investment to growth areas such as e-commerce as part of the reorganisation over the next six months, the company said on Thursday in a statement in response to inquiries from Bloomberg.

The shares rose 0.7 per cent early on Friday in Paris and they’re up 6 per cent so far this year.

L’Oreal said as many as 400 roles in the luxe division would be affected in the US, the company’s biggest market. Some will have a chance to move to another position. It didn’t say how many stores would close.

“Modernising its current distribution footprint is necessary for rebuilding the organisation around the future of the consumer,” the company said. “Luxury consumer behaviour in the US has fundamentally evolved, and L’Oreal USA will be evolving its business to meet these new consumer expectations and preferences.”

The French company, which employs about 88,000 people worldwide, has been struggling through the coronavirus pandemic as people around the world are spending less on pricey perfumes and makeup as there are fewer occasions for social interaction during lockdowns.

Even though its e-commerce grew 65 per cent in the first half of the year as consumers treated themselves to fancy things while stuck at home, it wasn’t enough to offset the decrease in overall demand for beauty products and services. Comparable sales dropped 19 per cent last quarter.

L’Oreal is not the only beauty brand facing cuts. The whole sector has been grappling with rising costs, with Estee Lauder announcing in August plans to trim 3 per cent of its workforce and close 10 per cent to 15 per cent of its free-standing stores. Retailer Ulta Beauty has said it won’t be able to bring back all of the employees it furloughed in April.