1Q 2003 could be a difficult quarter, says Goldman Sachs. (Stock Watch).(margins for cosmetics manufacturers threatened by price pressure and more competitiveness)

Cosmetics International, February, 2003 by Dossin, Jacques-Franck

COSMETICS manufacturers recently reported a strong fourth quarter, on average. However, we also witnessed further signs of price pressure and increased competitiveness, a potential threat to margins.

We believe 1Q '03 could be a difficult quarter, with weak reorder flows, as we suspect that decreasing consumer confidence has been translating into an inventory glut at some retailers. L'Oreal stands out as being better positioned than most of its peers, as size increasingly becomes the discriminating success factor, in our view.

This strong 4Q for manufacturers was prompted by an easy comparison, significant new product launches and an improvement in tourism flows. We saw some players attacking each other's core markets more aggressively, as well as...

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