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As a slew of beauty and personal care CPGs reported third-quarter earnings this week, the skin care category has been experiencing some ups and downs driven by drugstore closures and reduced innovation.
Galderma, owner of skin care brands like Cetaphil, reported this week single-digit growth for the first nine months of the year in the US, noting “more cautious consumer consumption” within the dermatological skin care market, according to a company release. Galderma noted Cetaphil grew in international markets during the period, but lagged in the US. It’s working to boost growth by upgrading its merchandising at Walmart and introducing a new Cetaphil Gentle Exfoliating line supported by Gen Z influencer Katie Fang.
While L’Oréal reported a 2.8% rise in sales in its third quarter, growth halted in its dermatological beauty segment, which houses CeraVe, La Roche Posay, and Vichy, with a 1.6% decline. CEO Nicolas Hieronimus said the “biggest culprit” for the slowdown was the US market, which he attributed to Gen Z consumers leaving the segment to try other brands as well as a lack in innovation from CeraVe. The company also noted continued softness in the makeup category within its consumer products division, distributed at mass. Hieronimus said post-Covid demand and a boost from inflation led to less aggressive innovation, but he’s asked the “teams of L’Oréal to increase both the quality and the quantity of their launches for next year.”
He also noted that drugstores are “more under pressure than other parts of the distribution,” and these retailers have been more “conscious” about their inventory this year. Several drugstores have announced this month plans to shutter locations—CVS is set to close 900; Rite Aid, 500; and Walgreens, 1,200, as their pharmacies struggle and they face competition for staple items from giants like Walmart and Amazon.
Hieronimus noted the company is “very happy” with its luxury brand’s performance on Amazon, but has seen “different stories” across its brands at different price points.
But, but, but: Some CPGs reported skin care and personal care success this quarter. Unilever—which has recently debuted premium innovations for its mass brands—said it saw a strong performance from Dove, Vaseline, and Pond’s, while Beiersdorf, owner of brands like Nivea, Eucerin, and Aquaphor, said this week its Derma sales grew by 19.6% in North America in the most recent quarter.