According to foreign media reports, L'Oréal is planning to close its U.S. stores to restructure its luxury division's operations. The restructuring process will last six months, and some employees will undergo position adjustments.
Faced with the changing shopping habits of American consumers who are increasingly visiting physical stores less often, L'Oréal USA's luxury division is investing in fast-growing areas such as e-commerce and other digital businesses.
In 2019, global beauty giant L'Oréal's sales in the United States fell by 0.8%, totaling 7.5 billion euros. The COVID-19 pandemic further exacerbated the sales decline, with the company's first-quarter 2020 fiscal year sales in North America dropping by 15.2%. Following health initiatives advocating mask-wearing, cosmetics and perfumes became poorly performing "hot" sectors, and these two areas are particularly important for L'Oréal's luxury division in the United States.
The French cosmetics group is not the only beauty company restructuring to address the crisis. In August, New York-based Estée Lauder announced it would lay off 1,500 to 2,000 employees and take other economic measures, following a quarter in which store traffic significantly decreased due to the COVID-19 pandemic. The U.S. company's restructuring strategy primarily involves the Europe, Middle East, and Asia (EMEA) region, as well as North America.