Puig recovers pre-pandemic sales and returns to profit

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Puig recovers pre-pandemic sales and returns to profit Listen to this article

Puig President Mark Puig.
Puig President Mark Puig.

The pandemic made it necessary to maintain social distancing and cover a large part of the face with a mask. Perfume and makeup ceased to matter much, and the blow was felt at the Catalan multinational company Puig, which brings together brands such as Paco Rabane, Carolina Herrera or Charlotte Tilbury. For the first time in its history, it recorded a loss in 2020. But the 2021 results, presented this Monday, show that the bump has been left behind: Puig turned a profit last year and earned 234 million euros, while achieving record sales of 2,585 million. These figures allow this family company to be optimistic in its forecasts, although it recognizes that cost increases due to inflation have already been transferred to product prices.

“The year of the pandemic was a total standstill, it completely affected the world of color cosmetics and perfumes. Now that we return to the reunion, we see people wanting to go out again and regain social interaction”, said Mark Puig, group CEO and third-generation member of the company’s leading family. In 2020, the company reported a loss of 70 million euros and billed 1,537 million, 24% less than in 2019. Last year’s sales jumped 68% compared to the year of the pandemic, which Puig said was a record figure. -which not only recovers to pre-pandemic levels, but exceeds- as well as profit before taxes, of 365 million.

As the group began its transformation, the pandemic hit. The company has drawn up a strategic plan to accommodate the changes that the sector itself has experienced. In Puig, perfumery brands are dominant, followed by makeup and skin products, which is trending in the region and how demand has evolved. “We want our picture of cake distribution to fit as much as possible in the area where skin is most important, makeup second and perfume third”, highlighted the CEO. The goal is to have makeup products account for 23% of total sales by 2025, and for this, in June 2020, the purchase of makeup brand Charlotte Tilbury was made official, an operation that Bloomberg then estimated at $900 million. .

The strategic plan presented in 2020 also included a forecast of doubling the business in two years (up to 3,000 million) and tripling it in five (up to 4,500 million). “At the moment we have already exceeded the forecasts and in 2022, a year ahead of what we said, we expect to achieve a turnover of 3,000 million. Puig underlined that except in 2020, we have met all the commitments we are making. “From now on”, the CEO pointed out, both makeup and dermacocosmetics – where Puig’s involvement in the Isdin company is evident – “will continue to grow even after making strategic changes”. This will be by promoting its brands, although the company does not rule out that it can continue to grow in an inorganic way: “We come from a very important acquisition, and so we need time to digest, But it should not surprise us that there could be new acquisitions by 2025.” Puig elaborated that the debt is 0.5x less than the Ebitda (which stood at 425 million in 2021).

Nor has there been a denial of disinvestment in certain products or selling of local and less important brands in the perfumery segment. With regard to the countries in which the group is present, the United States remains the first market and has experienced significant growth with a 104% increase in sales compared to 2020. The United Kingdom and Spain are the second and third markets. Whereas China is the fastest growing with a growth of 212%. The pandemic also gave a boost to the channel OnlineWhich was 28% of the sales last year.

Despite the good results, challenges continue, now in the form of rising inflation and the consequences of the war in Ukraine. Puig denies that the conflict has a huge direct impact on his business, as “Eastern European markets are not very important to the group”, but he acknowledged cost escalation due to supply problems, which they have already transferred. on prices. “Our product is an affordable, self-esteem-boosting luxury, and at the moment when people want to go out again, there is demand. So, I don’t think the price hike will have much impact on sales.”

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