The brick-and-mortar retail industry was hit hard during the initial periods of the pandemic. However, the companies from that sector are slowly finding their feet again as the economy emerges from shelter-in-place guidelines and lockdowns. The cosmetic companies had a challenging time as people stayed away from malls and retail stores.
According to an NPD research group survey, a staggering 71% of women who would normally wear makeup said they did so less often because of the COVID crisis. Revenues fell and earnings dropped. However, those businesses that have been able to adapt and shift to the digital side have seen some growth.
The top cosmetic stocks 2020 are the ones that have an online presence
Clearly, the behavioral change that the pandemic has brought about in people isn’t expected to fade away anytime soon. Even if a vaccine is out and the virus cases subside, it may take a few quarters or years before things go back to the way they were pre-COVID. Therefore, companies who are able to adapt to these behavioral changes and leverage their online businesses are the ones that may perform better.
In that regard, Estee Lauder has made significant efforts to build its online presence. It not only retails its products online, but also engages with influencers and social media personalities to engage the consumer. It regularly does live streams on makeup tips and tutorials. The results of these efforts are double-digit growth in online sales. Online sales make up 40% of total sales for the Americas.
How do beauty stocks compare amongst each other?
Estee Lauder and Revlon have been among the stocks with the most momentum. Their trailing-twelve-month returns have been in the 12% to 25% range. Another stock, elf Beauty has also done quite well on the momentum front and on the profit decline front. It has one of the lowest profit declines among the beauty stocks to buy.
