Mar 1, 2023
From condoms to cosmetics, China sales grow as lockdowns end
Mar 1, 2023
The world's top consumer and luxury goods companies have seen sales of everything from cosmetics to condoms grow in China since Beijing ended strict Covid-19 curbs, another sign that the world's No. 2 economy is reviving after the pandemic.
Upbeat comments on Wednesday from Reckitt Benckiser, Nivea-maker Beiersdorf, Moncler and Puma came after data showing China's factory sector grew in February at the fastest pace in more than a decade.
Beiersdorf chief executive Vincent Warnery said the company had seen the first signs of recovery in China and the global travel retail business, fuelled by the country's reopening.
"After a very volatile January, with traffic still heavily impacted by the release of Covid restrictions in December, we see a clear turnaround in retail sales starting in February," he said in a briefing for analysts.
"China is back to growth, not only online but also in brick and mortar."
Speaking on the sidelines of the briefing, Warnery said growth in Beiersdorf's premium La Prairie and cheaper Eucerin and Nivea skincare ranges was likely to be driven by Chinese demand. Tourism from China was helping sales in neighbouring Macau, Hong Kong, Taiwan and even Japan, he added.
Reckitt Benckiser, which makes Nurofen tablets, cold remedy Lemsip and Durex, saw a pick-up in China after a decline in volumes because of lockdowns.
"I have no doubt that the intimate wellness (business) in China is going to perform well," said interim chief executive Nicandro Durante, referring to the division which includes KY Jelly and Durex condoms.
The upbeat comments echo those of many executives during the fourth-quarter earnings season, particularly from luxury labels which are banking on a strong rebound fuelled by Chinese shoppers drawing on savings built up during pandemic lockdowns.
Resilient sales in China would be a relief for companies struggling with higher energy and wage costs, particularly in Europe, at the same time as rising prices of food, energy and rents are forcing consumers to be pickier about what they buy.
Stronger signs that Chinese factories are rebounding after Covid restrictions were lifted late last year could also temper an expected downturn in the global economy, as the U.S. Federal Reserve stays on its higher-for-longer interest rate path.
The data brought relief to investors and buoyed global equities.
The pan-European STOXX 600 was up 0.3% at 1109 GMT, adding to its more than 8% rise since the start of the year and regaining some of the ground lost last year when the region was convulsed by the Ukraine war and the energy crisis it triggered.
Shares in Moncler rose more than 5%, putting it among the best performers on the index, after the Italian luxury group, known for its warm puffer jackets, said it had seen a strong start to the year.
Chief marketing and operating officer Roberto Eggs told a call with analysts on Tuesday evening that the company saw double-digit sales growth in China before and after the Lunar New Year holiday in January.
"We always look at the results two weeks before and one week after the Chinese New Year and the impact is really positive," he said.
Adding to growing confidence in the luxury sector, the company said it had seen no adverse effects on demand from a 10% price increase at the start of the winter season.
Reuters reported in February LVMH's top fashion brand Louis Vuitton was expected to increase prices in China by as much as 20%.
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