L'Oreal SA

PAR:OR

Earnings Call Transcript 2021-Q1

[Françoise Lauvin, Head of Investor Relations]

Good evening. [Foreign Language] The L'Oréal team is pleased to welcome you to this conference call for the release of L'Oréal's first quarter 2021 sales. Together with me tonight are Chairman and CEO, Jean-Paul Agon.

[Jean-Paul Agon]

Good evening.

[Françoise Lauvin, Head of Investor Relations]

Deputy CEO in charge of divisions, Nicolas Hieronimus.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Good evening.

[Françoise Lauvin, Head of Investor Relations]

And CFO, Christophe Babule.

[Christophe Babule, Executive VP & CFO]

Hello, good evening.

[Françoise Lauvin, Head of Investor Relations]

I hope you had a chance to read our press release, which was issued earlier today and which can be found on our website, loreal-finance.com. The first quarter of 2021 continues to be overshadowed by the health crisis and the ongoing associated measures in some countries, in particular in Western Europe. Against this backdrop, L'Oréal has started the year with a strong return to growth. First quarter sales amounted to EUR 7.61 billion, up by 5.4% reported. Changes in the scope of consolidation were positive by plus 1.3%. They include, mainly on the positive side, the acquisition of Mugler and Parfums Azzaro since 1st of April 2020; of the American skincare natural brand, Thayers, since the 1st of August 2020; of the Prada license since the 1st of January of this year; and of the Japanese luxury aesthetic skincare brand, Takami, since February; and on the negative side, the termination of Clarisonic. During the quarter, the euro strengthened versus all major currencies, which led to a negative minus 6.1% foreign exchange impact. During the first quarter, L'Oréal continued its acceleration initiated in the third quarter of last year. After taking into account scope and currency impacts, like-for-like growth came to plus 10.2% over the first quarter of 2020 and to plus 5% over 2 years, in other words, over the first quarter of 2019. By division on a like-for-like basis, the Professional Products Division delivered an outstanding plus 21% performance, boosted by North America and the new markets. The Consumer Products Division ended the quarter at minus 0.7%, still held back by its heavy exposure to the makeup category, which remained lackluster. L'Oréal Luxe posted plus 14.6% growth, driven by the success of its skincare franchisees at Lancôme, Kiehl's, Helena Rubinstein and Biotherm and by good performance of fragrances. Active Cosmetics continued to build on the strong momentum of the latter part of 2020, up by 28.7%. By zone, in Western Europe, sales were again impacted by the closure of perfumeries, department stores and hair salons in several countries and by the sharp downturn in travel retail. Western Europe ended the quarter at minus 2.4%. North America performed well both online and offline with plus 6.3% growth. The new markets grew double digits. Asia Pacific at plus 28 -- 23.8%, returned to the extremely dynamic pre-pandemic growth rates, driven by the remarkable plus 37.9% increase in Mainland China. Growth came out at plus 15.1% in Latin America, plus 10.7% in Eastern Europe and plus 12.7% in Africa, Middle East. By channel, e-commerce continues to grow at the very dynamic pace of plus 47.2% and accounted for 26.8% of total sales while travel retail returned to positive territories. As usual, a few indications to help you with your forecasts. The net impact of changes in the scope of consolidation can be estimated at plus 0.7% over full year. And extrapolating currency rates of April 13 or EUR 1 at between USD 1.19 and USD 1.20 for the remainder of the year would lead to a negative currency impact of minus 2.7% on 2021 full year sales. All in all, as you can see in this first quarter, our strategic choices and fighting spirit, combined with the commitment and determination of our teams all around the world, are proving efficient as the group is once again significantly outperforming the beauty market overall. Our relentless focus on product innovation and investment in growth drivers to maximize all possible business opportunities will still bear fruit in an environment that is gradually improving also due to the vaccination program. We are therefore confident in our ability to continue to outperform the market and achieve a year of growth in both sales and profits. I thank you for your attention, and we are now ready to take your questions.

[Operator]

[Operator Instructions] We have a first question from Celine Pannuti from JPMorgan.

[Celine A.H. Pannuti]

It's Celine Pannuti from JPMorgan. So my first one will be market growth and outperformance versus that. Could you -- is it possible for you to share any numbers you may have for Q1 and as well as potential guesstimates for 2021? And within that, I was reading what you said about investment in growth driver. At the same time, it's a strong start to the year with easy comp when Q2 ahead of you. So I just wanted to understand the building block of the investments versus what will be a very strong operational leverage benefit? And my second question, well, I think double-digit growth in all division was quite stellar. But I'm going to ask on consumer, could you give us a bit more of a color on what has happened maybe by regions in this category? Was it all Western Europe issue or makeup as you mentioned? That would be helpful.

[Jean-Paul Agon]

All right, Celine. So I'm very happy that for my last conf call, you are again the number one person to ask a question, so I'll miss that.

[Celine A.H. Pannuti]

The pleasure is mine.

[Jean-Paul Agon]

Thank you, Celine. So we will share, by the way, today the answers because I'm very pleased to have Nicolas with us today. And so it's a rare opportunity. It's the first and only time you will have 2 CEOs on the line. So we will share, of course, the answers and also, of course, with Christophe and Françoise. So I will take the first two questions. Market growth, it's difficult to estimate because we are very early April. And so it's pretty difficult to estimate the market growth precisely. Our estimate is that probably the market grew around 3%, plus 3% to plus 4% at the end of the quarter. And it was pretty contrasted also between channels. We estimate that the professional business probably grew around 6%, that the mass was probably flat, that luxury was probably high single digits and that derma cosmetic was also probably high single digit. And the average of all that is around 4%, so which means that with a plus 10%, we are 2-point times -- 2.5x growing faster than the market, which is pretty consistent with the type of overperformance that we had in the past few quarters. So it seems to be pretty realistic. It's the same, by the way, for e-commerce. We grew plus 47% our e-commerce business during this quarter, and we estimate the market was more around plus 28%. So all in all, pretty consistent, we are probably growing at twice or 2.5x the speed of the market. Very difficult to anticipate what will happen in the next quarters, but as usual at L'Oréal, we are pretty optimistic and positive. We think that the market is clearly bouncing back. And of course, we are also entering into a very, I would say, easy comparative, because the last quarter last year was very down for the market and only the market improved a little bit in the third and fourth quarters. So we think that in terms of expansion, the market will be clearly positive this year. But it's too early to say at what level.In terms of investment, we are not -- we are doing what we said that we would do, which is that, of course, investing on our brands, our products, in media, in digital, in what we call the business drivers in order to support the market share gains and the growth. This is exactly, by the way, what we have done since, I would say, June 2020. And as you've seen last year, it has paid off pretty well. So we have exactly the same dynamic this year, the same strategy. And on the other side, we are benefiting still this year from savings on cost because with going-on of the pandemic, there are still many costs that are not happening, like travel or international meetings or things like that. So as we have said also, the savings that we are making, we are happy to reinvest them in business driver in order to fuel the growth and to fuel the market share gain that we have. Nicolas, you would explain to us the CPD evolution?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes, with great pleasure. So first of all, as you heard Jean-Paul said, we estimate that the mass market globally is kind of flattish, so our CPD sales at minus 0.7% are broadly in line with the market. In a context, where as you said it, we continue to be penalized by a strong footprint in makeup, as you know, it's 30% of the division sales when it's 15% of the market, so -- and obviously makeup is still very impacted by the limited social interaction in most countries. So it's not an excuse, but we are by far the world leader in mass makeup. And if we were to exclude makeup from CPD, the growth would be at plus 5%, which is a pretty good performance. The division is positive in all geographies but the U.S.A., but North America, which is the category, the country where we are most exposed to the makeup category, where we have to acknowledge that we faced some temporary supply chain issues and has a pretty significant difference between the sell-in and the sell-out of the U.S. market. And our sell-out is actually doing better and better. We just received today, this morning, the results of the last Nielsen period in the U.S.A. And we are there growing to a P3, so twice as fast as the market, with CPD at plus 8.5% versus a market at plus 4.3%. And that's a great performance with good performance in all categories but worth highlighting a great performance on makeup. We have March month at plus 26% on makeup, which is 9 points above the market and gaining share also on skincare. So we see in America, like in other countries both the beginning of a comeback to consumption on an acceleration of makeup and a good acceleration on CPD. So we have to assume that in the months and quarters to come with makeup coming back, with all the work we've done to rebalance the division's portfolio between -- around skincare, acceleration in e-commerce, we should see -- and of course, solving our short-term supply chain issues, we should see better performance of CPD in the months to come.

[Celine A.H. Pannuti]

All right. Can you clarify, so the supply chain issues are still ongoing? And is it possible to quantify whether it was an impact to call out on Q1?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

We will not quantify. These supply chain issue were, I have to say, globally quite conjunctural. They're the sum of many small things, supply chain difficulties on some packaging and raw materials because of the severe weather conditions that impacted the U.S.A. early in the quarter. We had also some issues with traffic congestions, maritime traffic congestions in the ports of America, which impacted some of our brands like NYX. And also, we've been, I have to say, we've been victim of our success in some instances with a brand like CeraVe or some of our makeup launches which have been incredible successes. I'm thinking about the Sky High mascara from Maybelline or the Shine Out Loud lipstick from NYX. These products have just been exploding our forecasts, and we've been trying to catch up. We've actually shipped much more than what we thought but not enough to satisfy our customers. And that, I hope, should progressively disappear over the second quarter.

[Operator]

We have a new question from Jean-Olivier Nicolai from Goldman Sachs.

[Jean-Olivier Nicolai]

I got two questions, please. So firstly, I was just wondering if you could perhaps give a bit more details on e-commerce. It's accounting for 27% of the group sales. Now within e-commerce, could you perhaps give us an idea of how big is direct-to-consumer today, online pure players and e-retailers? I think you gave those numbers in the past. And then just a second question on Professional Products. SalonCentric distribution channel is doing very well in the U.S. I was just wondering if you would consider perhaps expanding this concept to other countries for Professional Products? But also more importantly, could we imagine a SalonCentric equivalent for Consumer Products in the U.S.?

[Jean-Paul Agon]

All right, a very creative question. So I will take the first one regarding e-commerce and Nicolas will take the SalonCentric one. So regarding e-commerce, you're right, we are still running much faster than the market as you have seen with a plus 47% growth and 27% of our business. The growth is really on the three parts, as you said, that we have three parts, what we call the D2C, the online pure players and the e-retailers. And in fact, globally, we are growing very fast on the three. And as I said -- as we said last year, it's roughly 2 -- 1/3 each. So direct e-commerce is growing at 35%. It probably is still the bigger size, unlike pure players at plus 55% and e-retailers also at plus 55%. So the three parts of our e-commerce business are growing fast. What's interesting to note this quarter is that the e-commerce business is growing very fast around the world. And for once, the e-commerce in China is not the fastest, but because mostly because the other ones are really catching up with very strong performance. It's growing more than 80% in Western Europe, 70% in North America. But even also in some places where e-commerce is not yet very strong, it's really catching up very strongly, even in Latin America, Eastern Europe, everywhere. So e-commerce remains a very, very strong engine of growth for L'Oréal. Nicolas, do you want to say two words about SalonCentric?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. The question was whether we should replicate SalonCentric outside the U.S.A. Well, first of all, I have to say that we are very happy and very proud of the performance of our professional division, which is flying at plus 21% in a market that has bounced back but still maybe closer to mid-single digits. And it's -- obviously the U.S.A. play an important part, but it's a growth that's in all regions. Western Europe is growing. France is growing double digits. America obviously is growing, Asia Pacific also. So there is the performance of the professional division is everywhere. And it's benefiting from the digitalization of the professional market that has been accelerated by the COVID. It is also benefiting from the acceleration of the development of independent stylists. Some of the salons are closed, but the stylists have found ways to their consumers through either salon suites or home styling. And in the U.S.A., SalonCentric is a great way to supply these independent stylists, which is why our store network in the U.S.A. is growing really fast and is really allowing PPD U.S.A. to outperform the market. In other countries, and particularly in Western Europe, we have other ways to reach the stylists, which we do not believe require building a SalonCentric. There's a strong wholesaler business, which is growing. And we have developed, more importantly our own e-commerce. So it's a B2B e-commerce, it's L'Oréal Partner Shop, which allows us to reach any stylist and also through access to train any stylist wherever they are. So we think, and that's what we are proving this quarter, that we can achieve the very strong performance in Western Europe without having to replicate SalonCentric. As far as having a SalonCentric for CPD in the U.S.A., it's a creative idea. But I think that between our traditional retailers, such as Walmart, Target, Amazon and our own D2C, we have enough ways to reach our customers not to have to build our network of store.

[Operator]

We have a new question from Bruno Monteyne from Bernstein.

[Bruno Monteyne, Senior Analyst]

Two questions for me, please. On the first one on travel retail, it used to be a big part of your growth, clearly not anymore today. But these alternatives, like Hainan and similar new initiatives, to what extent are they able to replace the old travel retail channel? Is it back up to the 1/3, back up to 1/2 of what the old channel used to be? That's the first question. And the second question is on Active Cosmetics, which keeps going from strength-to-strength. Is there any risk that because it's more accessible through pharmacies during the lockdown period, that as the lockdown disappear, that you would -- as a COVID beneficiary, you might see a reversal on some of these growth fortunes? Or do you think it's not linked to the better accessibility during COVID lockdowns?

[Jean-Paul Agon]

Thank you very much. Maybe you want to take travel retail, Nicolas?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes.

[Jean-Paul Agon]

Yes, he thinks very well of Hainan, you were...

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. I was in Hainan, I love this place. And it's -- I love it every day a bit more. Now first of all, it's true that if we look at the global traffic, air traffic, it remains absolutely down in the first quarter. It's actually improved a little bit in Asia and degraded even further in Western Europe, where due to the lockdowns with a few sunny spells in Middle East or Greece, a few countries that where people traveled a bit. Within Asia, the market, the travel retail market, has been growing. We estimate that the travel retail market in Asia Pacific has grown double digits. And it's mainly due to a little bit of Korean travel retail, but mostly it's Hainan. So Hainan is becoming really a big piece of the market. Last year, everything was closed in China in January, February. This year, Chinese travelers could go to spend their Chinese New Year to Hainan and a lot of them went there. So it's becoming a very significant part of the market and we are growing there. I mean most of the growth of travel retail in Asia this quarter is from Hainan. And it will continue to develop as the Chinese authorities want part of travel retail purchases to stay within China. So it's a big growth driver for the future.

[Jean-Paul Agon]

And regarding Active Cosmetic, clearly this is the division that where the stores were not impacted by the epidemic. If one channel stayed open during all the epidemic, this is clearly the pharmacies and drug stores. So we don't think at all that the growth of our Active Cosmetics brand will slow down at the end of the epidemic, maybe even in the contrary, so -- and because also, there are really very deep reasons for this growth. The number one reason, of course, is that there is a growing demand for these kind of products and brands, skincare products that are high quality, high safety, recommended by dermatologists at also accessible prices. So this is the most important reason. And this reason keeps growing. And for example, for CeraVe, I think that -- I don't want to say that we have just scratched the surface because Nicolas will say that I'm creating huge expectation. But I think so, too. I think that in the U.S., of course, CeraVe is exploding, but we are still at the beginning of the story in many other countries of the world. And it's the same for La Roche-Posay. It's the same for SkinCeuticals. Even Vichy is coming back. So I think that this division is -- there's been really a tipping point in the evolution of this division in the last 18 months. And this division now is really poised to having a very strong growth because just simply, it corresponds to what consumers want. And this is the number one reason for success.

[Bruno Monteyne, Senior Analyst]

Can I just come back on the first question of travel retail? Asia Pacific travel retail, what percentage is that of global travel retail historically? And what is your global travel retail doing? Is it flat or it's still down because of the other reasons?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Our global travel retail is positive. It's positive. And it's positive mainly thanks to Asia. We are beating the market overall in travel retail Asia. And travel retail Asia is now by far the dominating region of travel retail. It's 90%. So it is a driving force. And Hainan is getting bigger within travel retail Asia. So this is going to be a big growth driver in the future definitely.

[Operator]

We have a new question from Tom Sykes from Deutsche Bank.

[Thomas Richard Sykes]

Just firstly, question on skincare and the degree of competitiveness that there is. How high is the level of new product launches compared to history? And is it becoming harder to beat the market, given the amount of capital that seems to be flowing in or new product launches that seem to be occurring there? And then maybe if you could give some insights into consumer behaviors in those countries or states which have reopened, maybe excluding China. Are you seeing overall consumer budgets increasing? Or is there a substitution of skincare for other products, notwithstanding underlying growth of the category as the countries open up, please?

[Jean-Paul Agon]

Okay. So I would start and Nicolas will continue. The skin category is growing fast. For example, we estimate, again it's an estimate because it's very early, that the market is probably growing around plus mid-single digits, let's say, in this first quarter. But we are growing, our skin category growing at plus 22%, so -- which means that we are really gaining market share everywhere. So I would say that it's the contrary to what you said. In fact, even if the market is really attractive for many players, it is a category where quality, reputation, safety, awareness plays a big role. And this is a market where our big brands are really making inroads. And we have very strong brands for skincare. Of course, all the brands of Active Cosmetics are by definition 100% skincare. But we have also brands like L'Oréal Paris, Garnier, but also Lancôme and Kiehl's and...

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Helena Rubinstein.

[Jean-Paul Agon]

Helena Rubinstein, which is completely reviving now, so -- and I would say that what happened on skincare is a little bit also what happened on other categories is that, okay, there is a great multiplication of small brands. But usually, these small brands stay small and the big brands are the winner of the game. So we are not at all worried about the evolution. The market is competitive but not really more than before. And the competition is more between big companies and big brands.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

So just to take your second question around the learnings from countries that have either reopened or at least improved their sanitary situation, obviously, you know about China, so you said you wanted other examples. But China continues to perform extremely well. The market is really booming. We estimate the market at plus 25% in China, so -- and the skincare continues to grow, hair care, too. And there is an acceleration, a progressive return to makeup. I just spoke about the U.S., last March was very positive on makeup with no slowdown on skincare. And there's an example we like to follow because I think it's very interesting is Israel. So it's a small country, but it's a country that has achieved the level of vaccination that we all envy. And in March, we see -- and even though people are still wearing masks, but we see the appetite for beauty confirmed. It may not be yet the Roaring Twenties, but still the makeup market in mass is up 43%, still slightly below 2019, but still up 43%. It's up almost 80% in luxury. And we don't see simultaneously people going away from skincare because they need -- whether it's UV protection, fighting again the maskne or just taking care of their skin, there is no tradeoff or substitution. So we see Israel as an encouragement or a positive sign on what the future could be for other markets.

[Operator]

We have a new question from Guillaume Delmas.

[Guillaume Gerard Vincent Delmas, Analyst]

Two questions for me. The first one is on professional. As salons are now or should be soon slowly reopening globally, would you expect some slowdown in your e-commerce online sales for the division? So basically, would you expect a bit of substitution effect? Or are you almost creating a new additional market for Professional Products with online? So what I'm trying to get to is do you see a risk of hair salons seeing your online business as a threat to their own business? Any potential conflict of interest here basically for you? And then my second question is on makeup. It would be very helpful if you could provide us with your like-for-like sales growth by category. You mentioned skincare plus 22%, but if we could also get makeup, hair care, fragrances, et cetera. And here, I know it's very, very early days. But are you seeing some signs maybe in some regions of the very beginning of a makeup party starting? And maybe asked differently, at least what is retailers' appetite right now for stocking and pushing makeup products?

[Jean-Paul Agon]

Yes. I will ask Nicolas to explain to you what we see on the makeup category. To be quick on the professional, I think what you're saying is pretty right. The development of e-commerce for professional business and professional brands has created, in a way, a new market. Because until a few years ago, you could only find professional brands at hair salons, in salons. And that was reducing, in a way, the potential of these brands. Because we know also that salons are not always very keen on selling product. They prefer to cut hair or color hair, the technician part of it. And in fact, the development of the e-commerce has really created an appetite of consumers for these brands and it's a kind of new market. So we -- to respond to your question, we don't see at all the risk of that at all. At least, we don't see a major risk of slowing down of the market, professional market, because of the reopening of the salon. And maybe you could even say that...

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Hair color will increase again.

[Jean-Paul Agon]

And hair color would increase and -- definitely. So on the contrary, we think that this is -- all these elements are going in the right direction. By category, I'll just give you quickly the number and Nicolas will comment on the evolution. In -- for our numbers in skincare, we said that the market, we estimate again the market around mid-single-digit and we are plus 22%. We estimate the makeup market still minus single-digit -- negative mid-single-digit and we are more or less on par with that, so we are on the market. Fragrance is bouncing back, and we are also positive mid-single-digit on the fragrance. And hair is also, we estimate, mid-single-digit positive. And we are growing twice faster than that. So pretty positive on all categories.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

And as far as your more detailed question on the early signs of makeup party in areas where, I would say, the lockdowns are progressively going away, as I explained over the previous question, which you may not have heard, first of all, in China, makeup is bouncing back. And we saw it at Chinese New Year, Chinese Valentine, there are many opportunities where we saw makeup bouncing back. In the U.S.A., mass makeup, both thanks to our innovations, because it's an [ offer ] market, but also in March because people are thinking of going out again, we saw in the mass market, the makeup market at plus 19% in mass. And we are, as I said, 8 points above that. And as explained, we see in Israel, which is the big country in our -- at least in this part of the world, where people get vaccines and people are starting living an almost normal life again, we see a strong acceleration of makeup. It's not recovered yet the levels of 2019, whether in China or in America or in Israel, but the numbers are spectacular, plus 43% in mass in Israel, plus 77% in luxury. It's pretty encouraging. So I'd say the early signs of the party are appearing.

[Jean-Paul Agon]

And in many countries, even if people can go out again, they still wear masks. So it's still a difficulty. But we see that again, for example, in Australia, in Australia, where also the situation gets better in terms of epidemic, we see the makeup market getting back to where it was before. And so we believe that our prophecy will be confirmed. And that once the people will not wear masks anymore, once party will be back, we think that makeup will be strong.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. Because actually within makeup, there's one category that is pulling the market down, it's lipstick, whereas eye makeup has been great, so...

[Jean-Paul Agon]

So we are positive. And fragrance is bouncing back.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. Fragrance is spectacular and...

[Jean-Paul Agon]

These two categories were clearly the most impacted obviously by the lack of socialization. And they are the most benefiting from the return-to-normal life. And as we are the #1 company in makeup, like in fragrance, it will definitely benefit us in the next few quarters.

[Operator]

We have a new question from Javier Escalante from Evercore.

[Javier T. Escalante Manzo, Research Analyst]

I would like to revisit e-commerce again a little bit. And this is more from the standpoint of you've been outperforming the channel for a few years. And at some point in time early in this process, investors were concerned about the small brands and the indie brands gaining share in e-commerce and that being an issue. So if you can like give us your assessment again how your brands are big brands versus small brands and whether you think that you are -- who are you gaining market share in e-commerce perhaps in the major markets, China and the U.S., if you can give us an update on that in that front.

[Jean-Paul Agon]

Yes. Maybe I can explain you again the theory, the theory or the logic and Nicolas can give you some examples. But the logic is what we have explained several times is that, in fact, contrary to what people thought, it's true that digital and e-commerce favors big brands. Why? For several reasons, number one reason is that with the small indie brands, there is such an hyper choice because you have thousands or tens of thousands of brands available on e-commerce that consumers in front of this hyper choice are completely lost, and they cannot choose the right brand or the right product for them. And so of course, they come back to what they have top of mind, the brands they know, the brands they know are good, the brands that have high awareness, reputation, et cetera. And the second reason is very technical is that in digital search, e-commerce, et cetera, it's all about algorithms. And algorithms are pushing the brands that are the most known, demanded, requested, et cetera, et cetera. So the process is pretty simple and it favors the big brands. And that's why it's true that everywhere on the planet, we see that it's not only -- it started in China, but now it's everywhere. We see that our big brands are being in fact favored by digital and e-commerce. Do you want to give a few examples if...

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes, it's very true. And I mean, there are many examples of that. But if we take -- you mentioned China and the U.S.A. Well, first of all, in the U.S.A. if we look at e-commerce during this quarter, it increased very significantly at plus 68%. So I would say it's almost -- it's more than twice the speed of the market, which means that we've been gaining share in a massive way. And typically, if I take an example of what's now a big brand, CeraVe, CeraVe is the #1 skincare and hygiene brand on Amazon, growing on Amazon 100%, so doubling its size when the category is growing 20%. And it's one brand. And within that brand, it's almost one product that's so loved by consumers, promoted by influencers that it's actually benefiting from the algorithm mechanic that Jean-Paul explained. And if we go east in China, regularly, if we take an event like 11/11, which is the summit of e-commerce in China, we have L'Oréal Paris and Hong Kong, who are year-after-year among the top 2 or 3 selling brands there with -- and within these brands, again you have very strong star products, such as Génifique or Lancôme, for example, which are known, trusted and pushed up by the algorithm. So overall, e-commerce and digital has lowered barriers to entry, but there are a lot of small brands that sell very little and the big brands are getting bigger. And we have 2 billionaire brands, e-billionaire brands at L'Oréal, which we're very proud of, Lancôme and L'Oréal Paris, both sell more than EUR 1 billion on e-commerce, which is a pretty major achievement.

[Javier T. Escalante Manzo, Research Analyst]

That is excellent. And just want to revisit another old theme, but I think that it's important to revisit though, given how important e-commerce is for you and it continues growing, is this whole notion of the margin impact and margin progression of e-commerce relative to the rest of channels. You mentioned in the past that e-commerce was accretive. And I would imagine that the direct-to-consumer business is the most accretive of the three kind of business models that you have there, so if you can confirm that, that direct-to-consumer is particularly accretive. And if so, wouldn't you like to give a stronger push to that kind of business?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Okay. So I'll answer that. So clearly, it's true that overall, e-commerce is accretive. And as you rightfully mentioned, there are differences within e-commerce between e-retailers. When we sell through walmart.com, the margin is the same whether we sell in store or on e-commerce, at least for us, probably maybe not for them. You have pure players, where it really depends on the pure players. And some of them, typically Amazon, you have to invest in media on the platform. So again, it really impacts the profitability. And direct-to-consumer, as you rightfully mentioned it, is the most accretive of all. But it's also a business model that is -- that does not apply the same way to all divisions. It's clearly stronger in luxury and a bit less relevant for mass market. And in the end, of course, we'd love to push D2C. But our philosophy is to shop where consumers want to shop. So we are and we have to be strong, active and pushing on all three channels and make sure that our customers can find our brands where they want to find them.

[Operator]

We have new question from Rogerio Fujimori from Stifel.

[Rogerio Fujimori, Research Analyst]

I have two. The first one is about your innovation pipeline. Could you talk about your program of major launches in Q2 and the pipeline of key launches for the second half for your billionaire brands and CeraVe? And my second question is about Luxe. Could you give us a bit more color on how this division performed relative to group average in each region? I've noticed that the division slowed a little bit versus Q4 on a 2-year stacked growth basis. So any color on sequential sell-in versus sell-out dynamics would be really helpful.

[Jean-Paul Agon]

Okay. Nicolas, you want to answer on the pipeline because it's for the next quarter?

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. Well, I'm not going to comment so much on the second half of the year, even though we have some activity planned, particularly in the luxury division, where the holiday season and it's fragrance period, so we'll have some launches. The first comment I would like to make is that we have -- because we've been one of the few players on the market to be innovative and active on the second part of 2020, we have a spillover of all these launches on the second part of the year. So just even without mentioning what is about to be launched on the second quarter, we have already rollover effect of the initiatives of last year. Now we have great launch plans on all divisions. On professional, we have great initiatives in hair care on L'Oréal Professionnel with a great launch that's happening right now, it's called Metal Detox, which is a great innovation because that proved that metal in the hair, it can be causing breakage or damage hair when you color your hair, so it's a big innovation. We're also launching a great line on Kérastase around curls. And I know it's very important, it's a big market and very important in terms of diversity. We have a very strong launch plan on the Consumer Products Division around Elsève with Dream Lengths Lamellar Water, on L'Oréal Paris, on Garnier with mask and ampules. We have -- we are launching a new variant of Fructis hair foods soon. And as I said earlier in the call, we had a few very, very strong launches in makeup on NYX and Maybelline in the early part of the first quarter, which are just being rolled out, so pretty nice plan. Also, on Active Cosmetics, so you're talking about CeraVe. I mean, on skincare and particularly on Active Cosmetics skincare, skincare is a trust and loyalty category, so it's not about shooting from the hip every other week. But we have a few initiatives. We have an acne cleanser and blemish product on CeraVe. We have new launches on Vichy, on SkinCeuticals and on LiftActiv from Vichy. And finally, on luxury, we have a few extensions on our fragrance lines on Valentino, on YSL, Libre. We have initiatives on Génifique, so -- and in makeup, too, a great launch on Armani lip. So no, we have a pretty nice launch plan and more to come on the second half.

[Jean-Paul Agon]

And regarding the luxury division, in fact, we are really still growing fast ahead of the market, this plus 14.6%. It's difficult to estimate the market, so we estimate the market is probably between 7%, 8%, mid-single-digit to high single-digit, so twice, probably twice the speed of the market. Of course, we will know more when all competitors will have published their numbers. But what we see everywhere is that our brands are really gaining traction, increasing their power and their share. Lancôme is doing very well. Giorgio Armani is doing very well, Yves Saint Laurent also. Kiehl's is great. We have some new miracles, like as we said, Helena Rubinstein. We have also these new brands -- this new brand, Takami, starting very well.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

[indiscernible] Prada.

[Jean-Paul Agon]

Yes. We have the new signatures that joined the division recently, like Valentino and Prada. Honestly, the division is really, really gaining power everywhere. And we are very confident.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. I think -- I mean the performance is really good. And you have also to bear in mind that some players did better than the others in 2020 versus 2019. And when we look at the performance of L'Oréal Luxe this Q1, not only is it at almost plus 15%, but it's growing versus in 2019, which is not necessarily the case of everybody. So no, we're very, very happy with L'Oréal luxury. Because not only is it doing great in China obviously, but it's doing good, it's gaining share in Western Europe, in the Middle East, in Eastern Europe. And we are still below market in the U.S.A., but improving period-after-period. So that's probably the area where we still can do a bit better, but overall very confident.

[Rogerio Fujimori, Research Analyst]

That's very helpful. So there was no material mismatch between sell-in and sell-out and it's really healthy salon dynamics. And it's just in the U.S.A. that is a little bit below market.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes.

[Jean-Paul Agon]

Yes, absolutely.

[Operator]

[Operator Instructions]

[Jean-Paul Agon]

So maybe there is no more question. I mean it has been so clear.

[Operator]

We don't have any question for the moment.

[Jean-Paul Agon]

All right. So ladies and gentlemen, I want to thank you. It was my last conf call with you. After 15 years, it has been a great pleasure to have this conference call with all of you. And I will leave you now in the hands, if I can say on the telephone, of Nicolas, of course, with Christophe and Françoise. And we wish you a very good time, very good quarter. And we'll talk again. You will talk again with Nicolas, Christophe and Françoise at the end of the next quarter at the publication of our results end of July.

[Nicolas Hieronimus, Deputy CEO & Head of Divisions]

Yes. Talk to you in July with great pleasure.

[Jean-Paul Agon]

So stay safe. Take care. Bye-bye.

[Christophe Babule, Executive VP & CFO]

Thank you. Bye-bye.