Key Takeaways From Beauty’s Earnings Season

As beauty’s earnings season winds down, some clear themes for 2025 rose up. Here is a look at those.

Skin Care Lost More Glow

The skin care segment, which prior to and during the COVID-19 pandemic was robust, showed signs of ongoing softness in 2025. At L’Oréal, the world’s largest beauty company, skin care — its biggest product category, ringing up 16.4 billion euros and comprising 37 percent of overall sales — underperformed last year.

“We will be winning again in skin care by bridging health and beauty, and pioneering the science of longevity,” said Nicolas Hieronimus, chief executive officer of L’Oréal, during a meeting with analysts and journalists on Feb. 13. “Skin care is clearly the category where we have the biggest acceleration opportunity, because after eight years of strong outperformance, 2025 has not met L’Oréal standards.

“The skin care playbook is the one that has changed the most with the proliferation of fun indies,” he continued. “So we have changed our own playbook.”

At Unilever, growth in prestige beauty, which includes skin care brands such as Dermalogica and Paula’s Choice, and its core skin care, delivered low-single-digit and mid-single-digit growth, respectively, last year. That fell short in comparison to the group’s well-being division, with brands including Nutrafol, Liquid I.V., Vaseline and Dove, which posted a double-digit sales increase.

Concerning Beiersdorf, which publishes 2025 sales on March 3, all eyes are on its hero skin care brand Nivea. Barclays European consumer staples analyst Warren Ackerman wrote a note titled “Can Nivea get its mojo back?” referring to how after two strong years for the brand, 2025 was disappointing. However, that the antiaging ingredient Epicelline was added into Nivea’s formula for its largest launch is expected to boost performance.

“The trick is to price the new innovations at a premium, but not so high as to put off consumers focused on affordability, and at the same time keep the Nivea core healthy,” Ackerman wrote.

He underlined double-digit gains at Beiersdorf’s Derma division, which includes Eucerin and Aquaphor and is the group’s most dependable growth engine that continues outperforming a slowing global skin care market, and early signs of improvement for La Prairie in China.

Fragrance Market Normalizing

Executives have noted a slight slowdown in the fragrance market, which has been ebullient for years.

“We have been living, both in fragrance particularly and the premium beauty market, on a ‘super-cycle,’ since COVID,” said Marc Puig, chairman and CEO of Puig, during a call with analysts and journalists on Wednesday. “The challenge is this transition from super-cycle to normalization.”

The maker of Rabanne, Carolina Herrera and Jean Paul Gaultier fragrances’ fourth-quarter 2025 sales, which rose 6.2 percent in reported terms and 9.8 percent on a like-for-like basis, were spurred by Puig’s makeup business.

Interparfums SA, in its outlook report for 2026 published in mid-November, said: “Despite the slowdown in global consumption during the year, the fragrance market has seen modest growth in 2025.”

Two other fragrance powerhouses — LVMH Moët Hennessy Louis Vuitton and Hermès International — reported weak perfume and beauty results for 2025. 

LVMH’s perfumes and cosmetics division, which includes fragrance brands such as Dior, Guerlain and Givenchy, generated full-year 2025 sales of 8.17 billion euros, down 3 percent on a reported basis and flat in like-for-like terms.

Over at Hermès International, fourth-quarter 2025 perfume and beauty sales declined by 16.6 percent on a reported basis and by 14.6 percent at constant exchange year-over-year to 122 million euros. That was the house’s only product category to be down in that period. Hermès chalked it up to a tough comparable in 2024, when the women’s fragrance Barénia was launched. 

For full-year 2025 Hermès perfume and beauty sales generated 489 million euros, down 8.6 percent on a reported basis and 7.6 percent at constant exchange rates. 

Travel Retail Kept Struggling

Travel retail didn’t rebound as hoped or expected. The business for L’Oréal — a bellwether — remained soft in 2025, especially due to the channel in China being temporarily disrupted by the suspension of the duty-free members app Sunrise and a change in domestic airport operators.

“To maintain healthy inventory levels, we adjusted our sell-in in Q4,” said Christophe Babule, L’Oréal chief financial officer, during the group’s analyst and journalist meeting. “Sell-out progressively accelerated and was close to flat in the fourth quarter, allowing us to improve our share by 260 basis points. Travel retail Asia now accounts for less than 4 percent of our sales, versus more than 6 percent only three years ago.”

Excluding the impact of travel retail Asia, L’Oréal’s growth at group level accelerated by one point each quarter last year.  

Last year, net sales at Shiseido sank by 2.1 percent on a reported and currency-consistent basis, and by 1.8 percent in like-for-like terms to 969.99 billion yen, or $6.26 billion. The business was dented primarily by declines in spending in the group’s China and travel-retail activity, especially in the first half of 2025. For the full year, that business was down 4.3 percent in reported terms and softened 3.5 percent on a like-for-like basis to 342.2 billion yen.

Tariffs Remained a Drag

Prior to the Supreme Court ruling striking down tariffs, they were seen as a big pressure point on beauty companies.

While the Estée Lauder Cos. CEO Stéphane de La Faverie wanted to focus on better-than-expected fiscal second-quarter earnings, investors had other ideas. On earnings day on Feb. 5, the company’s stock price was down by almost 20 percent to $96.66, with investors in part still jittery about tariffs. At the time, the group said it continued to expect tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million, mostly in the second half.

Procter & Gamble said higher costs from tariffs are estimated at approximately $400 million after tax for fiscal 2026. 

E.l.f. Beauty also continues to navigate the complex tariffs backdrop, facing approximately 60 percent tariffs. It is navigating them through a combination of pricing, supply chain diversification and business diversification.

Portfolio Arbitrage Accelerated

After a quiet first-half 2025, M&A activity in beauty ramped up, as companies look to either off-load underperforming businesses or add brands for inorganic portfolio expansion.

In late September 2025, Coty Inc. said it had started a strategic review of its $1.2 billion mass color cosmetics business and operations in Brazil, assessing a full range of alternatives, including partnerships, divestitures and spin-offs.

The Estée Lauder Cos. began assessing its portfolio in 2025. Although the company has not confirmed which brands are up for sale, multiple industry sources have indicated the company is looking to divest Too Faced, Smashbox and Dr. Jart. While the brands were originally thought to be marketed together, sources indicate currently the makeup brands are being offered as one grouping and Dr. Jart by itself.

An example of a big M&A deal that closed last year was E.l.f. Beauty’s acquisition of Hailey Bieber’s Rhode for $1 billion, which was announced May 28. The buy gave E.l.f. more than just a fast-growing buzzy brand: It also marked E.l.f.’s entry into Sephora U.S. For the three months ended Dec. 31 compared with the same prior-year period, net sales increased 38 percent to $489.5 million, primarily driven by growth in retailer and e-commerce channels, in the U.S. and internationally.

“Rhode’s performance has been phenomenal, exceeding every possible expectation, not only the number-one brand at Sephora in North America, but our U.K. Sephora launch exceeded the prior best launch ever by five times.,” said E.l.f. CEO Tarang Amin in an interview.

The biggest and most transformative deal for beauty in 2025 was the 4 billion euro transaction, announced in mid-October 2025 that’s not yet closed, of L’Oréal’s acquisition of Creed, plus of the long-term beauty licenses for Bottega Veneta and Balenciaga from Kering. L’Oréal will also take over the Gucci beauty license in the future, plus L’Oréal and Kering’s 50/50 joint venture agreement spans into well-being. 

L’Oréal might have another big deal on its hands following the death of Giorgio Armani last September. The designer decreed in his will that his heirs should look to sell 15 percent of the business to one of three preferred bidders: L’Oréal, the eyewear company EssilorLuxotica and LVMH.

Reports are also circulating that LVMH is looking to sell Make Up For Ever and Rihanna’s Fenty Beauty, among other brands on the market to snap up.