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    Content Microsite

    Global Beauty Companies React To COVID-19

    What impact is the coronavirus having on BP’s Top 20 Global Beauty Companies?

    Global Beauty Companies React To COVID-19
    Beauty Packaging Staff03.17.20
    As more cases of coronavirus are reported, more companies in the beauty industry are telling employees to work from home. The good news is that COVID-19 has stabilized in China, but health officials warn that things will get worse before they get better in much of the rest of world. In financial terms, nearly 200 publicly-traded companies have warned investors of the threat posed by the pandemic.
     
    Here’s a look at what Beauty Packaging’s Top 20 Global Beauty Companies are doing to reduce the spread of coronavirus and how the epidemic will impact business in Q1 and beyond.

    Amorepacific
     
    Amorepacific, a South Korean company, immediately took action when the COVID-19 outbreak occurred. In February, the company ordered its employees to telecommute. Approximately 3,500 people work at Amorepacific.
     
    The company also took action by donating $287,591 to coronavirus emergency response efforts in Wuhan to bolster inventories of needed medical supplies. Additionally, one of Amorepacific’s haircare brands, RYO, organized shampoos and conditioners to support frontline health workers' daily needs. The first shipment of donations departed the warehouse on February 27.
     
    Beiersdorf
     
    On March 3, Beiersdorf reported that net sales in fiscal 2019 increased 5.8%, from $8082 million to $8551 million, but the company was unsure about what impact the coronavirus will have.
     
    Regarding its outlook for 2020, Stefan De Loecker, CEO of Beiersdorf AG stated, “While the situation of the coronavirus remains dynamic, its impact on our business is not quantifiable yet. We therefore expect stronger headwinds in 2020. But we are optimistic that, with C.A.R.E.+, we have set the right path to follow through on our development potential in the future with targeted measures and a greater willingness to invest.”
     
    The C.A.R.E.+ program was launched under De Loecker to realign Beiersdorf’s Consumer Business Segment. With C.A.R.E.+ Beiersdorf sets off a multi-year investment program, with $77 to $88 million in additional investments starting in 2019 to boost the opening of new markets, innovations, digitalization and up-skilling of workforce.
     
    On March 17, Beiersdorf postponed the Annual General Meeting that was scheduled for April 29 due to the increasing spread of the coronavirus. A new date will be set soon.
     
    Chanel
     
    Chanel has scrapped plans for upcoming fashion shows in Asia because of the coronavirus outbreak, which is affecting spending on luxury goods.
     
    Chanel said it is monitoring the situation with “the health and well-being of its teams and clients” as a priority.
     
    Colgate-Palmolive
     
    Colgate's stock declined by almost 4% on Monday, March 9 and the stock is down by about 12% since February 1, after the WHO declared a global health emergency. Still, analysts don’t expect consumer product sales to take a major hit during the crisis, and sanitary and health care products like toothpaste could even enjoy a surge in sales.
     
    Representatives from Colgate-Palmolive, in their fourth quarter earnings call, noted “it seems certain that there will be a negative impact from the coronavirus on our business in China and the total company for at least the first quarter.”
     
    Coty
     
    Coty has not yet quantified how the coronavirus will impact the company.
     
    “At this point it is too early to quantify the exact impact,” said a spokesman for Coty. “In terms of business impact, beyond the direct impact to China, we believe the coronavirus could negatively impact the broader travel retail sector.”
     
    Pierre Denis will certainly have his work cut out for him when he succeeds Pierre Laubies as CEO of Coty this summer.
     
    The Estée Lauder Companies
     
    In February, The Estée Lauder Companies reported favorable financial results for its second quarter. Net sales of $4.62 billion increased 15% from $4.01 billion in the prior-year period.
     
    More recently, however, The Estêe Lauder Companies’ stock has been downgraded by financial analysts to sell from hold as the coronavirus outbreak spreads, raising the risk to travel retail. According to CFRA Research, 23% of the company’s fiscal 2019 net sales came from travel retail and 35% came from department stores. Additionally, 32% of the company’s sales came from the Americas, 43% came from Europe, Middle East and Africa, and 25% came from Asia-Pacific, traits that leave Estee Lauder vulnerable to a global slowdown caused by the coronavirus.
                    
    In the company’s Q2 report in February, Fabrizio Freda, president and CEO, said, “In the wake of the recent coronavirus outbreak, we are first and foremost concerned about the health and safety of our employees, consumers and everyone affected in China and around the world. Our hearts and support go out to the many people working hard to mitigate the health risks of the coronavirus. The global situation will also affect our financial results in the near term, so we are updating our fiscal year outlook. With our results to date and our agility in allocating resources, we will strive to deliver full-year growth at least in line with our long-term goals, even in this challenging moment. We will be ready to return to our growth momentum as the global coronavirus outbreak is resolved.”
     
    However, on March 19, the company backpedaled on its previous predictions. In an 8-K filing, Freda announced that the company was withdrawing its 2020 guidance in response to the COVID-19 outbreak.
     
    “Our guidance on February 6, 2020 for the fiscal 2020 second half and full year ending June 30, 2020 reflected the best information available to us at the time, as well as our best estimates about the pace of recovery of our then-impacted businesses," said Freda. "However, most retail stores in North America and Europe are now closing, and our global business is more broadly impacted by COVID-19 than we initially expected. As a result, we are withdrawing our previous guidance that we no longer expect to meet. We expect to provide an update regarding the impacts of COVID-19 on our business and our recovery plans when we report our next earnings scheduled for May 1, 2020.”

    Henkel
     
    US public health officials across the country are imploring citizens to frequently and thoroughly wash their hands with soap. In response, Henkel said it is seeing increased demand for Dial soap, whose sales and marketing are overseen at the company’s North American consumer goods headquarters in downtown Stamford.
     
    “People are worried about what they’re hearing about the novel coronavirus. They’re looking for ways to keep their families safe,” said Martina Spinatsch, Henkel’s vice president of beauty care research and development. “Hand-washing is one of the simplest things that you can do in order to help prevent the spread of diseases. The Centers for Disease Control and Prevention has some great messaging on that, and we’re working to amplify those messages.”


     

    US public health officials are imploring citizens to frequently and thoroughly wash their hands with soap.

    Johnson & Johnson
     
    In January, Johnson & Johnson initiated a project to develop a preventative coronavirus vaccine with the potential to protect people against the disease. The company also expanded on a partnership with the Biomedical Advanced Research and Development Authority (BARDA), part of the Office of the Assistant Secretary for Preparedness and Response at the US Department of Health & Human Services, to advance the vaccine program and screen its library of existing antiviral compounds with the goal of identifying those with antiviral activity against COVID-19.
     
    “We have established technologies and facilities that enable us to create, test and scale up production for potentially transformational vaccines. Our experience in helping to address epidemics, coupled with our expertise in respiratory illnesses, uniquely positions us to address the latest coronavirus outbreak,” commented Paul Stoffels, M.D., vice chairman of the executive committee and chief scientific officer at Johnson & Johnson.
     
    Also, across its businesses, J&J has mobilized to provide crucial donations and support to those impacted by coronavirus. These efforts include:
     
    ·      Donating 1 million surgical masks.
    ·      Donating 1 million Renminbi (approximately $143,000 dollars).
    ·      Donating 48,000 bottles of Band-Aid brand isopropyl alcohol.
    ·      Donating 1 electrosurgical generator and other medical devices to hospitals.
    ·      Donating over 1,200 packs of Acuvue contact lenses to medical workers.
    ·      Working on a potential vaccine.
     
    In February, two senior scientists at the company met with other top experts at the World Health Organization to discuss the company's coronavirus research and the world's response to the disease.
     
    On March 13, J&J’s Janssen Pharmaceutical Companies entered a collaboration with the Beth Israel Deaconess Medical Center (BIDMC) to support the development of a preventive vaccine candidate for COVID-19. The parties have commenced preclinical testing of multiple vaccine prospects, with the aim to identify by the end of the month a COVID-19 vaccine candidate for clinical trials.
     
    Janssen is optimistic that, in collaboration with multiple global strategic partners, it can initiate a Phase 1 clinical study of a potential vaccine candidate by the end of the year. In parallel to these efforts, Janssen is preparing to upscale production and manufacturing capacities to levels required to meet global public health vaccination needs.
     
    “It is critical to work with the best scientific minds as we look to rapidly identify and develop solutions to the COVID-19 outbreak,” said Stoffels. “By mobilizing our collective resources, we believe we can leverage the top science and cutting-edge capabilities to respond to this pandemic.”
     
    Kosé
     
    On January 31, Kosé revised its forecast for the fiscal year ending March 31, 2020. The company anticipates sales to fall short of previous estimates due to the impact on the duty-free stores channel from declining tourist numbers caused by the spread of coronavirus and the effect of the yen’s appreciation.
     
    L Brands
     
    Effective Tuesday, March 17, all Bath & Body Works, Victoria’s Secret and Pink stores in the US and Canada will close and will not reopen until Monday, March 30. The company’s ecommerce businesses will remain open for all brands.
     
    “We are committed to ensuring our frontline associates receive the support they need during this time, including pay. We will continue to evaluate how to best support associates as the situation continues to evolve,” stated the brand.
     
    According to Reuters, L Brands has drawn down $950 million from an existing credit line due to the coronavirus outbreak. L Brands claimed it still has $2 billion in cash following the drawdown, which it called a “proactive measure.” The company added that all of its employees would continue to receive pay and benefits during the temporary closure period.
     
    L Brands withdrew its first-quarter earnings forecast.
     
    L’Oréal                                     
     
    The French beauty and cosmetics group was among the first multinationals to suspend business travel, the ban is in effect until at least the end of March. L’Oréal has 86,000 employees around the world.
     
    On Squawk on the Street in February, L’Oréal CEO, Jean-Paul Agon said he anticipates consumption will bounce back after coronavirus.
     
    LVMH
     
    LVMH, announced this week that it will use its production lines in factories that normally produce perfume and makeup to start making hand sanitizer to protect people against the coronavirus outbreak.
     
    The luxury goods maker says it wants to help tackle a nationwide shortage of the anti-viral products across France.
     
    "These gels will be delivered free of charge to the health authorities," LVMH announced on Sunday.
     
    The company said it would continue to honor this commitment for as long as necessary, in connection with the French health authorities.
     
    According to March 12 data from the World Health Organization, France so far has dealt with 2,269 confirmed cases of the novel coronavirus that have led to 48 deaths.
     
    On March 17, Sephora, an LVMH company, made the decision to close all retail stores in the US and Canada as the coronavirus pandemic escalated. LVMH called it a “difficult decision” to shut its brick-and-mortar sites. Sephora.com and sephora.ca sites remain operational.
     
    Natura & Co
     
    Natura &Co has taken significant steps putting in place guidelines to avoid and restrict travel, large meetings and gatherings, new greeting and minimum distance protocols, increasing cleaning and sanitation of its facilities while encouraging remote and at home work. It has encouraged associates to self-quarantine, with no impact to their compensation and the company says it will continue to follow guidelines from both global, local public officials and health authorities.
     
    “We also understand and embrace the role that Natura &Co can play through the efforts of our employees, store personnel, representatives and consultants around the world. It is vital that we find ways to contain, mitigate and restrict the spreading of the virus while assisting essential functions, health services and supply chains to continue to function,” the company said in a statement.
     
    Since the outbreak in Asia Natura &Co has assisted local communities and hospitals by donating personal care products. Also, the company has significantly increased its capacity across all of its businesses while at the same increasing and facilitating access to those in need.
     
    The company says it will also increase education and training of all of its 6.5M consultants/representatives and all of its staff in over 3,200 stores globally, either on site or remote, to become advocates and educated on ways to support both local and global Health Care Authorities about proper actions, care and protocols to help fight the spreading of COVID-19, including proper sanitization with soap and water regularly.
     
    Procter & Gamble
     
    P&G’s stock fell almost 5% on Monday, March 9, and is down by a total of 17% since early February. A broader economic slowdown could have a significant impact on its supply chain. Analysts do not expect consumer product sales to take a major hit and sanitary and health care products could see a surge in sales, according to Forbes.
     
    In March, P&G CEO David Taylor asked all North American employees—including 10,000 in Cincinnati—to reduce the risk of coronavirus infection by working from home, if possible, for the rest of march.
     
    In a statement, P&G spokeswoman Tracey Long said, “We continue taking precautions with all our facilities, ensuring they are hygienic environments and minimizing the need of our people to be exposed to crowds by cancelling all in-person large gatherings in the coming weeks. The situation is highly dynamic and we are working diligently to ensure we can continue to serve consumers and customers at this time when consumers depend on our products for their daily routines.”
     
    Shiseido
     
    Shiseido said the coronavirus outbreak cut its sales in China more than 55% during the Lunar New Year holiday.
     
    In February, Shiseido told 8,000 members of its Japanese staff to work from home as a precautionary measure in a bid to stem the spread of the coronavirus. About 30% of Shiseido's Japanese workforce—including the president and other executives, but not factory workers and sales staff—were told to stay out of the office.
     
    To support those in need, Shiseido announced the “Relay of Love Project” in the hope that everyone affected may return to health and safety as soon as possible. As a part of the project, Shiseido donated $1.43 million to support the procurement of necessary materials for medical treatment and infection prevention. The company also promised to donate a portion of regional sales for continuous supporting actions.



     

    Shiseido told 8,000 members of its Japanese staff to work from home.

    Unilever
     
    On March 13, Unilever CEO Alan Jope announced a new set of measures to help protect its employees and their families from coronavirus, including a list of “musts” and “must nots.”
     
    Musts:
     
    • Self-isolate for 14 days if you are experiencing any cold or flu-like symptoms or have returned to your country from another location for either business or personal reasons.
    • Apply hand sanitizer when you enter a Unilever site.
    • Undergo thermal testing upon arrival at any Unilever site as legislation and equipment allows.
    • Use non-physical greetings (i.e. avoid shaking hands) and maintain appropriate "social distance."
    Must Nots:
     
    • Travel by air either internationally or domestically. Any air travel which is currently booked, apart from return-bound flights, will be cancelled centrally by our travel booking partners.
    • Work from any Unilever site other than your principal location.
    • Enter a Unilever site if you are suffering from cold or flu-like symptoms.
    • Invite any visitors onto a Unilever site without the prior approval of the site leader.
    • Attend meetings, conferences or events of more than 20 people.
     
    Unilever is also applying additional measures which vary based on whether workers have an office-based role, work in a sourcing unit or are field sales or retail staff.
     
    Meanwhile, the company is supporting global and local authorities by donating hygiene products to support the fight against coronavirus and will be further stepping up those efforts in the days ahead.
     
    “These are unprecedented times,” said Jope in his statement to employees. “Now, more than ever we need to stay calm, be resourceful and do what we do best: focus on supporting each other, meeting the changing needs of our consumers and on serving our customers.”
     
    Read the full report on this year’s list of Beauty Packaging’s Top 20 Global Beauty Companies here.

    More About Coronavirus
     
    Beauty Industry events are getting postponed and cancelled left and right due to the coronavirus. Read Beauty Packaging’s list of Beauty events impacted by COVID-19 here.
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