The trend: The lipstick effect may be longer lasting than it seemed just a few weeks ago when Ulta CEO Dave Kimbell said the beauty store chain has seen a pronounced slowdown in spending.

LVMH’s and L’Oréal’s earnings, along with strong beauty IPO debuts, suggest there’s still a sizable share of consumers willing to indulge in small luxuries such as face lotion, makeup, and perfume.

The evidence: LVMH’s beauty business has been “pretty strong,” CFO Jean-Jacques Guiony said during the company’s earnings call, adding there were “no particular signs of slowing down.”

• Beauty was one of the bright spots in LVMH’s tepid Q1: Its selective retailing unit, which includes Sephora, rose 11% year over year (YoY) on an organic basis. Its perfumes and cosmetics division grew 7% YoY.
• L’Oréal’s sales rose 9.4% on a like-for-like basis—with North American sales up 12.4%—thanks in part to its dermatological products division (which includes La Roche-Posay and CeraVe) growing 21.9%.

Market enthusiasm: While Kimbell’s comments drove a near-instant reaction from the stock market, two new IPOs suggest there’s still plenty of interest in beauty companies.

• Skincare company Galderma Group—which owns Cetaphil, Restylane, Sculptra, and other brands—had Switzerland’s biggest IPO in two decades last month. Galderma expects sales will maintain a compound growth rate in the low- to mid-teens through 2027.
• Puig, the fashion and beauty company behind brands such as Jean Paul Gaultier, will make its stock market debut on May 3 at a valuation of EUR 13.9 billion ($14.8 billion)—Spain’s biggest IPO in almost a decade. Puig is entering the public markets after buying brands like Charlotte Tilbury to help it compete with rivals L'Oreal and Estée Lauder.

Zooming out: We expect the beauty industry will remain strong this year. Our forecast expects US cosmetics and beauty sales to grow 6.9% in 2024, which would significantly outpace the broader retail industry’s 2.8% growth.

The big takeaway: Kimbell set off alarm bells when he spoke at a JPMorgan conference—not during the company’s earnings call—and so he may have overstated the issue or simply highlighted a company-specific challenge.

• Ulta faces growing competition from Sephora, which is rapidly expanding its presence in department stores like Kohl’s.
• There is also a growing share of consumers who have shifted their spending online. No retailer has benefited more from that change than Amazon, which grew its health, beauty, and personal care sales 28.2% YoY last year.

Go further: Read our Beauty Path to Purchase report.