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FASHION VALUE CHAIN

As people return to work and social gatherings, US cosmetics prices increased in August at their fastest rate in nearly 16 years, despite inflationary pressures.

The cost of bath, beauty, and nail items increased by 2.3% in August compared to a month earlier, which is the highest increase since December 2006. Prices in the category increased by 4.2% over the previous year, which is the highest increase since 2009.

According to statistics from NPD Group, beauty was the only retail sector to have growth in unit sales between late July 2021 and this year. Beauty has maintained strong growth, in part because cosmetics items need to be replenished and in part because many Americans are spending more time away from home. Other discretionary categories have witnessed sagging demand as customers struggle with increasing food and gas prices. Due to the demand, businesses have been able to sustain larger sales volumes while raising pricing.

Late last month, Coty Inc., which owns brands including Covergirl and Sally Hansen, said that it is implementing yet another round of price increases, with no impact on unit sales as of yet.

Sue Nabi, chief executive officer of Coty, stated on an earnings call that “the beauty category is not showing any signs of slowing down.”

According to a report from Bloomberg Intelligence analysts Deborah Aitken and Andrea Ferdinando Leggieri, in addition to robust demand, operating margins in beauty “appear least pressured, with low commodities exposure, limited freight costs and innovation to lift sales, particularly for premium brands.”