L’Oréal, the global cosmetic brand based in France, will reportedly start laying off employees in China. L’Oréal layoffs in China will affect the travel retail reduce the workforce of this division by half amid downturns in duty-free sales, according to a report. It said that the travel retail division has been struggling in recent years.
According to a report by Caixin Global, L’Oréal has yet to officially announce the layoffs and how many employees will be affected in China. It mentioned that the job cuts would be a part of a broader slowdown in the beauty market in China. It said that consumer confidence had been decreasing, and there was a shift in the spending pattern as well.
The employees affected by the L’Oréal layoffs would receive a compensation package based on their years of service. They will reportedly get at least five months of salary after leaving the company. However, L’Oréal has yet to confirm about such arrangements. L’Oréal sales in China have been declining, impacting the growth of the beauty brand. Last year, L’Oréal reported its first-ever sales decline in China along with a 3.2% YoY (Year-Over-Year) decline in North Asia sales, dropping to 10.3 billion euros.
Besides the declining consumer confidence in L’Oréal beauty products, there is also growing competition from domestic cosmetic brands, which offer affordable products with a strong presence in the local market. Due to these factors and post-pandemic performance, the L’Oréal travel retail sector has been under pressure.
The French cosmetic brand has been working on strategies to re-establish itself in the Chinese market, such as streamlining operations by implementing Speed, Scale and Superiority, part of the “3S Model”. The report did not mention how many employees will be affected by the L’Oréal layoffs in China.