Sephora's success shows that people still want to treat themselves during tough economic times
- LVMH achieved record-breaking 2023 sales, with help from its booming cosmetics giant Sephora.
- Sephora's CEO said the company had benefited from the "lipstick effect," The FT reported.
LVMH racked up record-breaking revenue last year, driven by the popularity of cosmetics giant Sephora, which it owns.
Sephora's CEO, Guillaume Motte, told The FT that its sales success, which is highlighted in LVMH's 2023 annual results, benefited from the "lipstick effect." This is a trend where customers still purchase small luxuries even when the economy is tough.
LVMH's "selective retailing" division, which includes Sephora, hit 17.9 billion euros, or $19.6 billion, in revenue. Its profits were up 76%. This is a bigger jump than LVMH's fashion or watches & jewelry divisions.
Sephora sells popular brands like Drunk Elephant and Fenty Beauty, which have often gone viral on TikTok.
Even Gen Alpha has been jumping on the Sephora hype, much to the chagrin of Gen Zers, who have criticized the presence of young kids at the high-end beauty stores.
In-store sales have driven Sephora's recent growth, Motte told The FT. It's a point echoed by LVMH CEO Bernard Arnault, who recently overtook Jeff Bezos as the world's richest person.
In the annual results report, Arnault linked the company's growth to the "ever-growing popularity of Sephora's store concept worldwide."
The US is Sephora's biggest market and "we are gaining market share there like crazy," Motte told The FT. Across North America, Sephora reached $10 billion in revenue in 2023.
Motte added that he was optimistic Sephora could pass 20 billion euros in sales "sooner rather than later."