1 min read

Sitting pretty in a recession 💄

Do we get lippy in a recession? 1998 research says when times are tough we splurge on luxury lipstick. Estée Lauder chair Leonard Lauder dubbed this the Lipstick Effect when he saw the trend play out after 9/11 and in 2008. So which company seems to be riding the recession wave with their sales sitting pretty?
Published on
December 6, 2022

You can’t put lipstick on a pig… what about a bear? 🐻 

From the decade defined by pencil thin eyebrows and lipsticks in every shade of brown, emerged economics Professor Juliet Schor’s 1998 research that found during tough times people splurge on lippy. Why? Because a little bit of affordable luxury makes us feel better. Then along came anecdotal evidence by Estée Lauder (EL), which reported a spike in lipstick sales following 9/11, then again during the 2008 recession. Dubbed by company chair Leonard Lauder, as the Lipstick Effect, it made savvy marketing headlines for the MAC ‘yipstick’ parent. 👄 

Might explain Ulta Beauty’s (ULTA) makeover, too. Last week, the company reported beating Wall Street expectations, returning quarterly revenue of US$2.34 billion, a cool US$130 million ahead of analyst estimates - with sales up 17% compared to their third quarter last year. Unlike beauty brand competitor Kohl’s (KSS), which houses bricks and mortar Sephora stores and whose shares have dropped 35% this year, Ulta is sitting pretty, up 15% so far in 2022. 🪞 The gloss has also come off Estée Lauder, with their year to date share price down an ugly 32%. Could Ulta’s in-store MAC makeover stations bring their sparkle back? 🪩

Ulta’s beauty secret? Selling more high value products so everyone can get that Lamborghini look. 💋

And this November, Ulta brushed up their mission to be the go-to colourful palette destination for the modern shopper, adding both The Beauty Bar activation space and Conscious Beauty shopping to their 1,343 US stores. Ulta doesn’t just pay lip service to inclusion either, landing them beauty spots on the Bloomberg Gender Equality Index and the SSGA Gender Diversity Index ETF (SHE), which follow the performance of diversity-forward public companies. So whether you’re vibing recession undies or pouting pretty at this season’s Chrissy parties, one might be a little more mistletoe ready than the other. 🌿

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