L’Oréal’s U.S. division plans to lay off as many as 400 employees and shutter stores as it seeks to restructure its business in response to consumers changing shopping preferences.
Over the next six months, the company plans to shift its investments to eCommerce, which has become a growth area for the beauty brand.
“Modernizing its current distribution footprint is necessary for rebuilding the organization around the future of the consumer,” the company told Bloomberg. “Luxury consumer behavior in the U.S. has fundamentally evolved, and L’Oreal USA will be evolving its business to meet these new consumer expectations and preferences.”
The company’s move to focus more on eCommerce comes at a time when it is challenged with growing its business amidst decline in demand for perfumes and cosmetic products. While the company’s business grew by 65 percent in Q1 2020 as more consumers treated themselves to expensive self-care products, the sales growth did not offset the broader decline in consumption of makeup and perfume products observed around the globe. The French retailer saw its comparable sales decline by 19 percent last quarter, Bloomberg reported.
Other players such as Estee Lauder and Ulta Beauty have made similar moves in the previous few months, reducing the size of their workforces and physical footprints and focusing more on increasing their digital sales.
In August, Estee Lauder announced plans to reduce its workforce by 3 percent and shutter up to 15 percent of its stores. Ulta Beauty, meanwhile, scraped its long-planned expansion to Canada last month and in May, it said it was reducing its planned store openings for 2020 from 75 to 45. The move came after the company saw its net sales decline to $1.2 billion in Q3, a third of what the retailer had observed in the year before.