L’Oreal SA plans to close retail locations as part of a restructuring of its U.S. luxury operations as the company grapples with severe changes to consumer behavior amid the pandemic.
The Luxe Division of L’Oreal USA plans to shift investment to growth areas such as e-commerce as part of the reorganization over the next six months, the company said Thursday in a statement in response to inquiries from Bloomberg.
L’Oreal said as many as 400 roles in the U.S. Luxe Division would be affected. Some will have a chance to move to another position in the company. It didn’t say how many stores would close.
“Modernizing its current distribution footprint is necessary for rebuilding the organization around the future of the consumer,” the company said. “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 French company has been struggling through the coronavirus pandemic as people around the world are spending less on pricey perfumes and makeup as there are fewer occasions for social interaction during lockdowns. Even though its e-commerce grew 65 per cent in the first half of the year as consumers treated themselves to fancy things while stuck at home, it wasn’t enough to offset the decrease in overall demand for beauty products and services. Comparable sales dropped 19 per cent last quarter.
L’Oreal is not the only beauty brand facing cuts. The whole sector has been grappling with rising costs, with Estee Lauder announcing in August plans to trim 3% of its workforce and close 10 per cent to 15 per cent of its free-standing stores. Retailer Ulta Beauty Inc. has said it won’t be able to bring back all of the employees it furloughed in April.
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