Yesterday (April 15), media reports revealed that L’Oréal China’s Travel Retail division is planning layoffs, with the proportion potentially reaching as high as 50%. The main reason for the layoffs is the underperformance of the domestic travel retail channel over the past two years.
According to the report, a person close to L’Oréal headquarters stated that the layoffs have not yet begun. Another person familiar with the matter said that some of the laid-off employees will be offered compensation equivalent to “N+5” (i.e., their years of service plus five months’ salary).
It is understood that in 2013, L’Oréal defined travel retail as its “sixth continent.” The travel retail division is mainly responsible for selling products in travel-related settings such as downtown duty-free stores, airport duty-free shops, and Hainan offshore duty-free stores. According to information on L’Oréal’s official website, airports are a key sales point, accounting for more than 50% of total travel retail sales.
However, in recent years, L’Oréal’s travel retail channel has underperformed. Jean-Paul Agon, Chairman of the Board and former CEO of L’Oréal, disclosed at the company’s 2019 financial results meeting that travel retail accounted for about 9% of global sales. Meanwhile, the Q2 2023 financial report showed that a slowdown in the daigou (reseller) business put pressure on travel retail sales—particularly in Hainan, where stricter controls on daigou activities from mid-May 2023 led to a noticeable decline in sales performance.
Additionally, according to the 2024 financial report, the North Asia region—which had long been L’Oréal’s second-largest market—achieved sales of approximately €10.303 billion in 2024, a year-on-year decrease of 3.2%, making it the third-largest market globally. L’Oréal explained in the report that the slowdown in North Asia was mainly due to negative growth in mainland China’s beauty market and increased pressure on travel retail sales in Hainan.
Furthermore, in May 2024, L’Oréal announced that Jesus Abia would replace Tao Zhang as General Manager of the Asia-Pacific Travel Retail Division. The division stated that Abia’s deep understanding of the travel retail ecosystem will play a key role in further strengthening the development of L’Oréal’s brands in the Asia-Pacific region.
