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US inflation rates may be near 40-year highs, but consumers will still purchase lipsticks, fragrances and other beauty essentials. That’s the prediction of several cosmetics company CEOs, who provided their take on the economy and the consumer during Q3 earnings calls.
Coty CEO Sue Nabi observed that even in tough economic times, women will still opt and shop for cosmetics, but the product mix might be different than in previous downturns. Leonard Lauder famously introduced the world to the Lipstick Index, the theory that beauty sales increase during recessions. Nabi says the Lipstick Index has been replaced by a Fragrance Index; the numbers may bear her out. In Q3, prestige fine fragrance sales rose 11% to $1.3 billion, according to The NPD Group. The double-digit gains come a year after prestige fragrance sales soared 50%, according to NPD.
Overall, US prestige beauty sales rose15% in Q3. Hair care led the way, with a 23% increase to about $854 million. Makeup sales increased 15% to $2.1 billion, followed by skincare, up 14% to $1.7 billion; fragrance, up 11% to $1.3 billion.
ELF Beauty Chairman and CEO Tarang Amin said he is “highly confident” about the forthcoming holiday season. So confident, in fact, that ELF moved away from holiday gift sets and is focused on core products.
Earlier this year, Estée Lauder Companies Chairman William Lauder said he was “cautiously optimistic” about Holiday 2022. Since then, the company has thrown caution to the wind. Earlier this week, ELC purchased Tom Ford in a blockbuster $2.3 billion deal.