Nivea-maker Beiersdorf has said that its La Prairie premium skincare brand and sun care products have been hit by the drop in international travel due to the coronavirus pandemic while sales of hand wash, hand creams and plasters jumped.
Beiersdorf already scrapped its 2020 outlook last month due to the pandemic, and released preliminary first-quarter sales that showed a 3.6% fall from a year earlier.
The sales of La Prairie dropped 36% in the quarter due to the collapse in global tourism, which also hit its sun care business. A quarter of La Prairie sales are usually made in travel retail, particularly among Chinese tourists.
Beiersdorf shares were down 2.7% at 09:25 GMT, and have now fallen 15.6% since the start of this year.
Significant Impact
Beiersdorf would also see a significant impact from the pandemic in the second quarter, chief executive Stefan de Loecker told journalists.
Finance chief Dessi Temperley said that the loss of sales of La Prairie - the group's highest margin brand - as well as a rise in sales of lower margin personal care items would also have an impact on profitability.
De Loecker said it was too early to say what impact the crisis would have on the sun care business, noting that sales had been good in Germany at the end of March due to warm weather, but it was unclear when tourism might rebound.
Beiersdorf last year bought U.S. sun care brand Coppertone from Bayer for $550 million to strengthen its position in North America. Its Nivea Sun is a leading sun care brand in Europe.
Company Strategy
The CEO said acquisitions were still part of the company's strategy and it would keep an eye out in case the crisis opened up new opportunities.
Beiersdorf said sales of medicinal Eucerin and Aquaphor creams rose 11.5% in the quarter and its healthcare unit behind Hansaplast plasters saw growth of 10.1%. Nivea sales dipped just 0.6%, supported by demand for soap, hand wash and hand cream.
Rival Unilever ditched its sales targets last month but said it expected people would focus more on personal hygiene, driving sales of laundry detergents, hand sanitizers and soap-based products even after the pandemic subsides.
Beiersdorf has switched much of its marketing spending online during the crisis, with digital media spending up 43% in the first quarter, helping to drive a 23% rise in e-commerce sales.
Beiersdorf's Tesa adhesives business saw sales fall 5.1% in the first quarter, but finance chief Temperley noted that orders had picked up in China towards the end of March as the automobile industry resumed production.
