Tatcha, Hourglass, and Living Proof Fuel Unilever First Quarter Growth

LONDON – Unilever’s Beauty & Wellbeing division is becoming an increasingly attractive asset, with sales growth far outstripping every other company category in the first fiscal quarter.

Underlying sales at the division, which includes brands such as Dove, Pond’s, Tatcha and Hourglass, grew 7.4 percent to 3.2 billion euros. Reported growth was 3.1 percent compared with the corresponding period last year.

Overall, Unilever beat analysts’ expectations with underlying growth of 4.4 percent, and reported growth of 1.4 percent to 15 billion euros in the three months. Jefferies noted that Beauty & Wellbeing outstripped its expectations of 5 percent growth in the period.

The consumer giant’s shares were up nearly 5 percent at 40.48 pounds in mid-morning trading on the London Stock Exchange.

Chief executive officer Hein Schumacher said overall growth was driven mainly by Unilever’s 30 “power brands,” which saw underlying sales growth of 6.1 percent in the three-month period.

Unilever has been ramping up investment behind those high-performing brands which are growing faster than the company average, and which generated 75 percent of turnover in the first quarter.

In beauty, those brands include Dove, Dermalogica, Paula’s Choice and Pond’s.

On Thursday, Schumacher said Unilever’s transformation into a higher-growth, more profitable company was still at an early stage, “but we have increasing confidence in our ability to deliver sustained volume growth and positive mix as we accelerate gross margin expansion.”

In the first quarter, the Beauty & Wellbeing division accounted for 21 percent of group turnover. Within that division, Unilever’s prestige brands notched double-digit growth led by Tatcha, Hourglass and Living Proof.

Other top performers included Liquid IV, Olly and the hair wellness brand Nutrafol. The company said it recently extended Nutrafol into skin care with a physician-formulated daily supplement for women designed to address the root causes of acne.

Unilever said Vaseline grew in the double-digits with the successful rollout of Gluta Hya body care to new markets and the launch of new variants. Following a relaunch last year, Pond’s face care continued its good momentum with high-single digit growth led by volume.

The company left its 2024 guidance unchanged, saying it expected underlying sales growth for 2024 to be within its multi-year range of 3-5 percent, with an increasing contribution from volume growth.

The company said it is confident it can deliver a “modest improvement” in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind its brands.

As reported, Schumacher wants to turn Unilever into a leaner, more focused, and cost-efficient operation, and has announced a raft of brand sales over the past months.

Earlier this year, the consumer giant announced it would be spinning off its ice cream division, in line with its aim “to do fewer things, better, and with greater impact.”

Unilever is expected to divest the ice cream division by the end of 2025, and believes the separation will create “a world-leading business, operating in a highly attractive category” with five of the top 10 selling global ice cream brands.