L'Oreal SA

PAR:OR

Earnings Call Transcript 2019-Q1

[Operator]

Welcome to the conference call regarding L'Oréal sales of March 31, 2019. [Operator Instructions] The conference is about to begin. And now I hand over to Mrs. Françoise Lauvin. Madame Lauvin, please go ahead.

[Françoise Lauvin, Head of Investor Relations]

[Foreign Language] Good evening to all. Welcome to this conference call for the release of L'Oréal sales for the first quarter of 2019. With me tonight are Chairman and Chief Executive Officer, Jean-Paul Agon.

[Jean-Paul Agon]

Good evening.

[Françoise Lauvin, Head of Investor Relations]

Chief Financial Officer, Christophe Babule.

[Christophe Babule, Executive VP & CFO]

Hello. Good evening.

[Françoise Lauvin, Head of Investor Relations]

And Mark Prestwich, Group General Manager, Financial Communication & Strategic Prospective.

[Mark Prestwich]

Good evening.

[Françoise Lauvin, Head of Investor Relations]

I hope you have received our press release that was issued earlier tonight. Let me briefly give you the highlights of the first quarter before we open the call for the Q&A session. The key highlight of the quarter is obviously the strong like-for-like growth of plus 7.7%, which equals that of the last quarter of 2018. At constant exchange rates, sales increased 8.9%. Changes in the scope of consolidation had a positive impact of plus 1.2%. They include the acquisition of Pulp Riot last May, of the German organic beauty company Logocos in July, of the Korean lifestyle makeup brand Stylenanda in October, and of Valentino since the start of 2019.After taking account of positive 2.5% currency impact, stemming mainly from a higher U.S. dollar and a more stable sterling against the euro, reported sales increased 11.4% to EUR 7,550 million. The powerful growth drivers remain the same as in 2018: Luxury and Active Cosmetics, skincare, Asia, e-commerce and Travel Retail. However, the performance continues to be very differentiated, both by division and by region, reflecting a market which is also very contrasted.By division, on a like-for-like basis, L'Oréal Luxe continues to deliver outstanding performance with growth of plus 14.2%, driven by its 4 major brands on the buoyant market. Active Cosmetics rose 13% with all regions contributing to the sound growth. The Professional Products Division started the year with plus 2.2% increase, and the Consumer Products Division posted a gradual improvement over previous quarters at plus 3.3%. By region, sales rose 1.1% in Western Europe and 1.2% in North America. New Markets continued on a very strong base of plus 16.6% with Asia-Pacific up 23.2%, Eastern Europe up 7.1%, Latin America up 4%, and Africa, Middle East at minus 1%. By channel, 2 of the 2018 growth drivers were once again powerful in this first quarter, e-commerce with a further increase of 43.7% to 12% of total sales and Travel Retail advancing 24% like-for-like to above 8% of sales.As usual, a few words to help you with your forecasts. Extrapolating currency rates at the end of March against the euro to the end of the year for EUR 1 at around $1.12 would lead to a positive currency impact of plus 2.2% over full year sales, and the net impact of changes in the scope of consolidation can be estimated at plus 0.9% over the full year. All in all, the economic environment remains volatile, uncertain and contrasted. But the year is off to a strong start, and it bodes well for the future as it reinforces our confidence in our ability to outperform the beauty market in 2019 and to achieve another year of both -- of increase in both sales and profits.I thank you for your attention. We are now ready to take your questions.[Operator Instructions] So we have our first question from Celine Pannuti from JPMorgan.

[Celine A.H. Pannuti]

My first question is about...

[Jean-Paul Agon]

We don't hear you well, Celine. You have to speak loud or put your phone receptor...

[Celine A.H. Pannuti]

Yes. Sorry, this is my microphone. I can shout. So the first question is about Asia. So we have now several quarters where you were able to deliver a 20-plus percent growth in Asia. So my question is, what do you think the market growth is in this region? And whether we should now get more assets turned that this is the right demand. And maybe if you can talk about your ability to grow maybe faster than the growth of the market. The second question is on North America, which was surprisingly sequentially weaker. So I understand that the Mass market was difficult. Could you please tell us what is the seller growth of the Mass market and how you're selling against that? And then if you can, why is it that Luxury was slower? So again, is it that you are being held back by the channels? Or was it actually there was slowdown in the market?

[Jean-Paul Agon]

Okay. Good. Interesting. So regarding -- we have an echo here. Sorry, we have an echo. All right, can you hear me well now? Hello? Hello?

[Celine A.H. Pannuti]

Yes.

[Jean-Paul Agon]

Can you hear me, Celine?

[Celine A.H. Pannuti]

Yes, yes.

[Jean-Paul Agon]

Okay. Sorry, sorry because it didn't work well. So all right. So regarding your first question, it's a bit early in the year to make an estimate of the market. But if I had to make one, I would say probably that the market in Asia-Pacific is roughly around, I would say, low double-digit, around 10% maybe at 11%. And it's true that we are overperforming this market very strongly at around 23%. And in fact, it's a good performance across the region. Of course, China is very strong, and China, for example, in this quarter is again at around 32%, which is exactly the rhythm that we had in 2018. So that's really good. But other countries are really good too. India is around 18%. Malaysia is 26%. Even Japan is at plus 7%. So really across the region, we have a very strong performance, and we are definitely gaining market share. By the way, we got recently information saying that we are now by far the #1 company in total Asia, and even in the luxury -- for the Luxury Division, we are also -- we've also become the #1 luxury company in Asia. So really, it's a very good performance across the region. Also I would say, across divisions because this performance is true for all divisions, for Luxury definitely but also for Mass, for Active Cosmetics and even Professional, which is not great in total, but happens to be good in Asia. And the result is that as we mentioned in the press release, Asia has become already in this first quarter the #1 region for L'Oréal, which is the first time that it happens in the history of the company. So very good performance in Asia.In contrast, North America is much more difficult. We have to say that the beginning of the year was the -- was tough in North America, first for the market itself. The market is really slower than it was before and than it used to be. We estimate that the markets -- again, it's an estimate because it's a bit early to tell, but we estimate that the market is probably around plus 1%. And it's made of market, which is at more or less flat for Luxury, flat more or less for Mass, slightly growing for Professional, around plus 3%, and maybe growing faster for dermocosmetic at plus 6%. And on this market, all in all, we are on par with the market at plus 1%. We are doing a good beginning of the year on Professional. We are doing a very good beginning on Active Cosmetics. We are on par, we think, globally with the market on Luxury, and we are, for the moment, below market in Consumer. Okay?

[Celine A.H. Pannuti]

All right. Can I just ask you the 10% to 11% market growth in Asia, could you say what is Luxury in Asia in terms of market growth?

[Jean-Paul Agon]

Market growth, I don't think I have the -- this detail. Do you have it? No, no, Mark, Asia. Asia, I don't know. Probably stronger than the average. Maybe around, I don't know, 15% or something like that.

[Celine A.H. Pannuti]

No, I was asking because you were mentioning that you had a strong -- were performing strongly this number. I was wondering whether -- because you have higher footprint in Luxury in that region and if Luxury was growing faster? What -- is that -- is the mix the reason of your growing faster than the market? Or is there specific other reasons that we should keep in mind?

[Jean-Paul Agon]

Definitely, the market that is growing the fastest in Asia is Luxury. We estimate -- if you want an estimate of the growth of the Luxury market, it's around -- probably around 18%, which is pretty good. And on this 18%, we are doing more than 30%, which is a very strong growth. But again, the 4% -- the market, generally speaking, are doing very well in Asia, and we are overperforming all markets by division in Asia and roughly in all countries.

[Operator]

So we have another question from Mark Astrachan from Stifel.

[Mark Stiefel Astrachan, Managing Director]

I wanted to ask kind of the same but different question on China and Asia-Pacific growth. I guess it's just amazing how strong your growth has been, just unbelievably impressive category, YOURS, some of your other Luxury peers. I guess I'm curious, what do you think is specifically driving adoption now of prestige beauty? I know you've talked about just per capita consumption and all the kind of various things. But I'm curious if you've had a chance to kind of step back and kind of think about it a bit more as business is now accelerating for Luxury. It's not just on big numbers, it's just getting bigger it seems. Some I'm curious if anything has kind of changed in your thinking there? And then related to that, are you seeing any competition emerging from homegrown brands in China and other markets that you think at some point may have an impact? And kind of related to that, what do you attribute the outperformance for the Western brands, YOURS, LVMH, Waters, relative to the market numbers that you just laid out. What is it that the consumer finds particularly appealing for those big brands and the growth?

[Jean-Paul Agon]

Okay. All right. So first, it's true that we are -- we really enjoy a very strong growth of the Luxury market in -- Luxury beauty market in China, but also in other parts of Asia. In China, the Luxury market is still growing around 40%, which is absolutely amazing. It's difficult, honestly, to analyze all the factors. What we see when we go there is that there is a real strong appetite of consumers, and especially, new consumers, millennial, young consumers in China who are really embracing from the very beginning, brands like Lancôme, Giorgio Armani, Yves Saint Laurent, et cetera. So it's a real appetite of the young generation in China to go directly to these Luxury brands. And so in fact, it's really positive. Of course for us, it's even more positive because as you know, it's in China that we have the highest market share for the Luxury Division in the world, more than 25% -- 28% now, which very high. So of course, for us, it's a double benefit. And in the Luxury world, there are no -- there are not so many local players. There is no Chinese luxury brand. The only one is ours is Yue Sai. There are a few, of course, Korean and Japanese, but they don't have the momentum that we had thought that it could have. And even some Korean brands have slowed down a little bit. So for the moment, I would say that the Western brands, the French brand, Italian brands like Lancôme, Giorgio Armani or Yves Saint Laurent and some of our competitors, of course, are really enjoying a fantastic ride and are really gaining market share, which is very, very important. So for the moment, we see -- and there is no -- I'm sure that you have a question in mind, which is, is there a slowdown or are we seeing a slowdown? And we can -- I can say that we are seeing no slowdown. Okay?

[Mark Stiefel Astrachan, Managing Director]

Yes, that's very helpful. I just wanted to ask one quick follow-up. India, you mentioned multiple times in the release. Is it now big enough from a percent of business basis and growth basis to start really contributing going forward?

[Jean-Paul Agon]

Yes. Because India is still, in term of size, much slower than, for example, China. It's still 10x slower than China, but in term of growth, at 18.5% in its first quarter is very strong. And of course, India is bit particular as in India, we have only 2 divisions that are operating, one is, of course, the Consumer Division and the other one is the Professional Division, and both are doing extremely well. So we are really building a business there, and I'm sure that Indian consumers are buying some luxury product, but they don't buy them in India because there is no retail for that. And they are buying them in Travel Retail, in Dubai or other places. Okay?

[Operator]

So we have another question from Richard Taylor from Morgan Stanley.

[Richard Taylor, Equity Analyst]

Three questions from me. The first one, I think in the past, you talked a great deal about the balance of the portfolio and how important that is. So perhaps when one division slows, another division accelerates. As to perhaps in that context, can you give us a little bit of insight into how you think about reinvestment from perhaps the strong growth parts of the business into the slower growth parts of the business? So how do you think about that cross-funding? And then the second quick one is on CeraVe. Maybe you could give us the growth run rate of that business, please.

[Jean-Paul Agon]

Okay. CeraVe, you have the number, Françoise?

[Françoise Lauvin, Head of Investor Relations]

Yes, yes. CeraVe is high contributor to the growth of the Active Cosmetics Division, but all brands there are growing. So it's not the sole contributor, but CeraVe was a growth rate that was close to that of last year. It's very high...

[Jean-Paul Agon]

I mean maybe you can say it, Françoise?

[Françoise Lauvin, Head of Investor Relations]

It's above 40%.

[Jean-Paul Agon]

40%, not bad, not bad. And regarding balance of portfolio, in fact what we are saying -- what we're saying is that we are covering all the markets, and in fact, with this we can seize the opportunities where they are. Definitely today, the opportunities are, as you know, in Luxury, in Active Cosmetics and in Asia. And you wouldn't be surprised if it's there that we are reinvesting the most. So we -- of course, we don't neglect what we have to do for Professional Products Division, for example, butit is not where the return on investment is the best right now. And so we are definitely reinvesting, especially where the market is very favorable and where we see some great potential ahead. Okay?Other question?

[Operator]

Yes, we have another question from Stephanie Wissink from Jefferies.

[Stephanie Marie Schiller Wissink, Equity Analyst]

Our question relates to the e-commerce business. It's been very strong for many quarters. I'm wondering if you can just help us contextualize the 20% of total sales. How does that look by region? And then also within China, this was one of the focus points of your Investor Day last year. It's been a substantial growth component of China. Can you just help us think about what percentage of the China business is online? And how important has that online shift from department stores to online to Tmall been for the growth of the China market specifically?

[Jean-Paul Agon]

All right. So e-commerce, as you say, is a very strong engine of growth for us right now, and it'sa large part of our growth. The growth on the first quarter was 44% -- 43.7%. And the first interesting thing is that it's a growth across divisions. We have more or less the same type of growth across the 4 division: for Luxury, for Mass, for Professional, for Active Cosmetics. And we have also a pretty well -- growth pretty well across regions too. So it means that e-commerce is gaining traction, really, all over the world and in all categories of business and all channels. As usual as before, it is also pretty well split between, what we call, D2C, the direct e-commerce, which is our own site plus Tmall, the online pure players and the e-retailers, and it's pretty well balanced between the three. And in China, in fact, the percentage of business that we do with e-commerce is pretty different. In Mass, it's probably around today -- how much, Christophe, would you say 40%?

[Christophe Babule, Executive VP & CFO]

Sorry, above 40%.

[Jean-Paul Agon]

Above 40% for Mass. It would be between 20%, I think, and 25%, something like that for Luxury and a bit below for the rest. So which means that all in all...

[Christophe Babule, Executive VP & CFO]

34% is the weight of e-commerce in China.

[Jean-Paul Agon]

Yes, 34% in China. So definitely, China is leading the way in term of development of e-commerce. By the way, we are using this for us internally. We are using really China as a role model and as a pilot for the development of e-commerce across the world even if the -- as we know the ecosystem is not the same in the other parts of the world. So a very strong engine that, in fact, is not slowing down because during this first quarter, I mean it was even -- grows even faster than the year before. And it's still only 12% of our sales, but it's becoming significant. Okay?

[Operator]

So we have another question from Marion Boucheron from MainFirst.

[Marion Boucheron, Research Analyst]

Three questions just for me, please. One, on the acceleration in Europe and notably in the Consumer Division, Mass market, which is back to growth. Could you give us a bit more color on what drove that and if there's been very different trends across some markets and what about trends? Then the next one also comes to e-commerce. I was just wondering if you're there online versus brick-and-mortar you see a stronger market share gains? And if yes, what do you attribute it to, like a better place for products, like page one or ratings? And what you do better there? And then on all the acquisitions you've done recently, are there any international rollout plan, not CeraVe, the new ones that we are not really aware of? And if so, what timings you have in mind?

[Jean-Paul Agon]

Okay. So let's start with the acquisition. In fact, if we look at the acquisition that we made last year, Stylenanda is now starting really and expanding in China, and so that's a big deployment for the brand, and the brand is growing pretty fast. Logocos, it's still at an early stage so we're still, for the moment, only in Germany. We are not expanding the brand anywhere yet. And Valentino is just the beginning of the story because we know we are just starting the business with Valentino, but this brand will be eventually sold everywhere where the Luxury Division is present. It's -- the goal is to put Valentino where Giorgio Armani or Yves Saint Laurent is. But we are really just at the beginning. So to answer your question, I mean there is no real impact of the deployment of these brands in the first quarter, except maybe the beginning of Stylenanda.In term of market share, e-commerce, what we see, and especially, as we said before, what we see in China is our big brands are, in fact, getting stronger, thanks to e-commerce in China. It's a bit counter-intuitive, but it's something that we have said for a while that when a brand is strong and when it's -- and when the brand knows how to play with digital, in fact, its power can be boosted by e-commerce. And what we see in China is that our big brands like Laurent Attal, like Maybelline or Lancôme are really boosted by e-commerce and with a very strong market share. And regarding Western Europe, it's true that we are happy with the beginning of our business in Western Europe this year. But it's still, of course, pretty -- still pretty low in term of growth at plus 1%. But it means that we are on par with the market or slightly above the market, and we have some good news in term of countries. France, at last, is getting better after 4, 5 years of difficulty. So we are very happy about that. Spain is doing very well. Even U.K. -- when we all know about the specific situation of U.K., even U.K., it's pretty positive for us since the beginning of the year. And we have a temporary slow start in Germany, but nothing to worry because our positions and our market share are pretty good there. And so we should have -- I think we should have a solid year in Western Europe. It will not compete, unfortunately, with the Asian growth rate, but at least, it's -- I think we're going to have a solid year. Okay?

[Operator]

So we have another question from Pieter Vorster from Crédit Suisse.

[Pieter Willem Vorster, Research Analyst]

Françoise, could you help us again with the category growth rates perhaps?

[Jean-Paul Agon]

Of course.

[Françoise Lauvin, Head of Investor Relations]

Category growth rates.

[Jean-Paul Agon]

Good question.

[Françoise Lauvin, Head of Investor Relations]

So well, the good news is that all categories are up in this first quarter with obviously the skincare having the strongest growth, and that's mid- to high-teens overall. And then we have makeup and fragrances, which are mid-single digit. And we have smaller growth for the hair coloring, haircare and the others hygiene products.

[Jean-Paul Agon]

So it's more or less -- as you can understand, it's to more or less the same type of dynamism that we had last year. In fact what we see, and to summarize, that the thing we have understood that -- is that what we see at the beginning of the year is that we are -- we see more or less the same kind of dynamics that we observed last year in term of categories, in term of channels, in term of e-commerce, in term of Travel Retail, in term of Asia. So for the moment, the beginning of 2019 looks very much like 2018.

[Operator]

So we have another question from Javier Escalante from Evercore.

[Javier T. Escalante Manzo, Research Analyst]

My question has to do with the contrast between Asia and particularly North America. You mentioned that you estimate market growth at 1%. So point number one, to what extent these relates to e-commerce that online retail sales are more cannibalistic in the U.S. versus in China that is more an enabler of demand? So if you can give us your thoughts with regards to that? To what extent is e-commerce and what you are basically stating about that 1% growth is essentially that the growth is linking to nontrack e-commerce sales?

[Jean-Paul Agon]

I think that unfortunately, the difference between the growth of the market in North America compared to the growth of market in Asia is not only linked to the impact of e-commerce. To be honest, we are also surprised by the weakness of the consumption in North America because you heard the numbers I said before, I mean the market is pretty, pretty subdued in North America. So we don't know exactly where it comes from. Does it come from, I don't know -- the fact that the tax refunds were not as generous this year as they were last year. Does it come from the increase of the gas price? But globally speaking, there is very weak for the moment -- pretty weak consumer demand in the U.S., and honestly, I don't think that it comes from the impact of e-commerce because it's -- the numbers I gave you include e-commerce. And I don't think that the cannibalization is a bit responsible for 1% or 2%., but it doesn't explain the difference between 11% growth of the market in Asia and 1% in North America. I think it's more linked to the dynamism of one of the economy and -- but also to the will of consumption, I would say. There is a very strong consumption will, appetite that we see in China, but not only in China, as I said before, we see it in many, many countries of Asia. And definitely, now that we have, at L'Oréal, a very strong position in Asia, still limited compared to the market share that we have in other parts of the world because I think that our market share in Asia is around 8.7%, which is -- we are #1, but we are still far from the market share that we have in Western Europe, which are twice that level. So -- but we are, at the moment, where we can really maximize the opportunities everywhere, in every division, in every countries of Asia. So that's why I am pretty -- I'm very confident about our capacity to keep growing in this part of the world.

[Javier T. Escalante Manzo, Research Analyst]

That's very interesting. One follow-up. One of the weak markets, at least, I didn't hear about it, was Brazil. Could you give us an update with regards to how Brazil is doing?

[Jean-Paul Agon]

Yes. With pleasure because honestly, the first time in many quarters that I have some good news to share with you about Brazil. And I'm very happy about that. Well, first, the market -- it's a bit early to tell, but the market is not bad in Brazil. Apparently, there is a kind of real turnaround in the market, and we are growing high single digits in Brazil. We are doing extremely well for Active Cosmetics, which is a very strong division, as you know, in Brazil for us as there is no real Luxury business in Brazil. So our small Luxury business is also growing fast, and we are positive -- was almost positive, flattish for Consumer Division, which is already a good improvement compared to where we come from in Brazil. So we think that really in Brazil, definitely, the worse is behind us, and we hope that we're going to be able to even accelerate in the quarters to come.

[Operator]

So we have another question from Guillaume Delmas from Bank of America Merrill Lynch.

[Guillaume Gerard Vincent Delmas, Director]

A couple of questions for me, please. The first one is on your renewed push in the organic segment this year. I mean I appreciate it's still very early days. But could you shed more light on your performance with Garnier Organic, La Provençale, and even Logocos in Germany, please? And my second question is on your Consumer Division, which I guess is related to my first question. But you mentioned in the press release, the division is gradually improving. So my question here is, how should we interpret this? Is this just a very factual comment that like-for-like sales growth is finally in excess of 3%? I think that's the first time in more than 2 years we're seeing such a performance. Or actually do you see scope for further acceleration over the next quarters?

[Jean-Paul Agon]

Good question. So first, regarding the organic, we are pretty happy with the beginning of our 2 new brands. One is Garnier BiO that we introduced in the beginning of the year, and we are seeing some very, very good results while it's still early, as you said, but very good early results all over Western Europe, good in France, good in Germany, good everywhere, which is interesting because it shows that even big brands like Garnier can be totally legitimate in this BiO organic category and not only local brands or whatever. And La Provençale also is, I think, a very good start. So we are very happy with that. And by the way, the BiO results are part of the reacceleration of Garnier, which is at around plus 5% in this -- beginning of the year when Garnier was flat last year. So good science, number one. Number two, Consumer Division. The comments that we made are always factual. So it's -- you should not be surprised. So the -- it's true that the first reason for the comment is the fact that we are back to growth of about 3%, which is -- which was not very frequent in this past 2 or 3 years, but also because we think that there's a good reason to believe that this growth should keep accelerating over the next few quarters. So we are pretty confident.

[Guillaume Gerard Vincent Delmas, Director]

And a very quick follow-up. With Garnier at plus 5%, L'Oréal Paris off to a good start, so should we interpret that Maybelline and maybe NYX are off to a slower start, so the makeup category as a whole just off to a slower start in the Mass market channel?

[Jean-Paul Agon]

Absolutely, you do well your math, and it's clear that with the 2 brands over the average, we must have 2 brands under the average. And it's not surprising that these 2 brands are makeup brands because there is clearly quite significant slowdown of the makeup category in the Mass market. The makeup category probably worldwide -- yes, globally worldwide in Mass is flat at best or even -- maybe yes, flat at best. And definitely, this is a little bit of headwind for 2 purely makeup brand, Maybelline first, which is also around flat and NYX, which is slightly negative at the beginning of the year. So it's -- but again, that's the L'Oréal game. We have -- we cover all categories with all the brands. And for the moment, we enjoy a very strong ride on the skincare, which is positive. And unfortunately, balanced it a bit with a slow -- pretty clear slowdown on makeup. But this could change again.

[Operator]

So we have another question from Chas Manso from Societe Generale.

[Charles Manso de Zuniga, Director of Consumer Equity Research]

Maybe carrying on from the last question on the Mass market, your growth in that, you mentioned that North America is weak and you mentioned that makeup in Mass is weak, and yet you're gradually improving. So could you sort of fill in the gaps? Is it Asia again that's the accelerator for you in Mass, and I guess, skincare Mass? Any sort of color on what's getting faster in the Mass side for you. You've been quite clear on the disappointment of North America, are there any signs, any rays of lights on the horizon there? Or should we expect a pretty lackluster rest of year? And on e-commerce, I guess it's sort of -- it's getting to be the channel of choice for the younger consumer, but also it's expanding your distribution coverage, importantly in emerging markets. To what extent do you feel that -- how far -- how much further can you go in terms of distribution coverage gains? And how much runway do you have there? And how much would you sort of rely on sort of demographics of young consumers to try the e-commerce from hereon in?

[Jean-Paul Agon]

Okay. So first, Mass market. Yes, in fact, if we look at the performance of the Consumer Division across the world, as we said, we have a pretty -- a good start this year in Western Europe at least compared to the year before. The year before was a bit tough in Western Europe for the Consumer Division, but this year is off to a good beginning. And we even think that we are pretty confident for the rest of the year. North America, I told you, is difficult. Asia again is very strong, is above double-digit. And it's not only China, as I said, it's many countries in Asia. Latin America, it's a bit of mix bag as we have some good news in Brazil, as I told you, at least better news than before, but we are still a bit disappointed in the other countries. But we think also that this should improve, and we are doing pretty well as usual in Eastern Europe. So all in all, the Consumer Division is having a good beginning with one caveat, which is North America, which is a bit tough. Good transition to talk about North America. At the moment now, we don't see reason for a major improvement in North America in the next few quarters. So as you can understand, we are pretty bullish in several parts of the Europe, very bullish on Asia, very confident for Western Europe, pretty confident for Eastern Europe, also for Latin America. But we are a bit cautious, I would say, for North America this year. And e-commerce. So you are absolutely right to say that e-commerce is helping us a lot in term of, I would say, consumer coverage, especially in emerging markets. We all know that one of the difficulties for L'Oréal was historically this difficulty to go deep -- in the deep trade in many countries like India, like Indonesia, even like China because we don't have always the products that can go easily very deep. And in fact, e-commerce is a fantastic opportunity for leapfrogging this difficulty as obviously, now any consumer, any young lady in China, India, Indonesia or wherever, or Japan, can have access to any product she wants just by e-commerce. So for us, e-commerce, I would say, is a double benefit, double whammy. It's first, of course, an opportunity to have access to young consumers, but also an opportunity to go directly to parts of the countries where we -- it was difficult for us to go before because there was a lack of retail organization to do it. Okay?

[Charles Manso de Zuniga, Director of Consumer Equity Research]

Yes. So I don't think you've mentioned what you think the overall beauty market growth is running at. Is it still running at around about the 5.5% that it was last year?

[Jean-Paul Agon]

No, you're right. I didn't mention it because it's a bit early to tell. But if you really want me to say something, I would say that at this stage, we see it running more or less the way it ran last year. So I would not be surprised if -- again, we don't have the statistics, and we are pretty serious about that. So we don't want to disclose numbers that we are not sure of. But I wouldn't be surprised if the rate of growth is comparable to the one that we had last year, which is good, by the way because as you know, last year was the best market growth that we had in 20 years. So it's -- if everything keeps going the way it is for the moment, we could have another year of strong market growth.

[Operator]

So we have no further questions for the moment. [Operator Instructions]So we have another question from Loïc Morvan from Bryan Garnier.

[Jean-Paul Agon]

Loïc, we are happy to hear you.

[Loïc Morvan, Research Analyst]

Thanks. So I would like to know if you can remind us what is the weight of the skincare category in your sales. And the second question is about volume and value for the first quarter.

[Jean-Paul Agon]

These are 2 very good questions for Françoise.

[Françoise Lauvin, Head of Investor Relations]

Yes, I'll do it. So the weight of skincare, if we look at the whole of last year was 32% of our sales, 32%.

[Jean-Paul Agon]

The number one category, yes?

[Françoise Lauvin, Head of Investor Relations]

Yes, number one category ahead of makeup. And in terms of split for the first quarter, we had 7.7% of organic growth, and it splits roughly 25% for units and 75% for value, which is mostly mix and premiumization.

[Jean-Paul Agon]

Now it's interesting because we see a little acceleration of the units, which is good, including at the Consumer Division. So -- which is also a good sign. And regarding your first question, skincare is a very strategic category for us because it's also the -- our number one category. It's the number one category in market worldwide. So the fact that skincare is booming right now is a clear tailwind.

[Operator]

So we have another question from Marion Boucheron from MainFirst.

[Marion Boucheron, Research Analyst]

I'm not trying a shot here, but apart from 2018, you were often calling Q1 as a tough quarter within the year, and we were seeing an acceleration throughout. So you've given your thoughts about the Consumer Division, but how are you seeing at the world groups looking forward, given the very jump-start we've had?

[Jean-Paul Agon]

That's a very smart question. We didn't traditionally always call the Q1 softer than the others, it depends. Some years, it was softer and some year, it was not. So to be very clear with you, we don't think that this year with the first quarter that we published, we don't think it's -- we can call it soft.

[Marion Boucheron, Research Analyst]

No, we cannot.

[Jean-Paul Agon]

Thank you for agreeing with me. I think we can call it pretty good and strong. And the rest of the year is still open. You know that we live in a very VUCA world, volatile, uncertain, complex, ambiguous. And it's pretty difficult to forecast exactly what the market will be and what -- how we will perform. What we believe is that we think that we will be able to accelerate, as I said on the Consumer Division. We hope that we will see some improvement in the Professional Division. But it's -- we don't know yet if the fantastic market conditions that we have seen on Luxury, for example, will remain as strong as they are so far. We have to see. And also -- as I explained also, if you look at the panorama of the market to -- at the beginning of the year, it's true that globally, it's a good market, but it's a very contrasted market. As you understood very well, it's a very dynamic market in Asia, but pretty tough in North America and the -- I would say so-so in Western Europe as anticipated. So it's the balance of these 3 markets that will determine the rest of the year. Okay?

[Operator]

So we have no further question. So back to you for the conclusion.

[Jean-Paul Agon]

Okay. Well, the conclusion would be very quick. So we thank you -- all of you for attending this conference. And we'll be happy to talk to you again in a few months at the end of July for the second quarter. Thank you very much, have a great evening.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.