Risk, returns & timeframes illustration
1 min read
December 6, 2022
by
Belinda Nash

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?
Risk, returns & timeframes illustration
1 min read
December 6, 2022
by
Belinda Nash

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?
Table of contents
Free Getting Started Course
Take your first, or next, step to becoming a confident investor with Hatch's free online course – just 10 minutes a day, for 10 days.
Weekly news from Wall St
Subscribe to The Fry Up - your weekly sizzle of headline-grabbing share market news. Read by 60,000 Kiwis to help them take charge of their investing journey.

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. 🌿

Belinda Nash
Finance writer
Linkedin

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

Join the Kiwis who are hatching their tomorrow and have invested more than $1 billion with Hatch.

More recent news articles

More recent learn articles

6 min read
Nov 28, 2023

Black Friday’s record-breaking US$9.8 billion US online sales, US$70.9 billion globally

New Zealand imported Black Friday from the US, but that doesn’t mean we’re spending up large during tighter economic times. While Black Friday spending soared in the US, it seems Kiwis weren’t quite so keen to part with their hard-earned cash. So who was spending up large in record US Black Friday shopping?
Read more
6 min read
Nov 21, 2023

Underrated Thanksgiving stocks and hopes for a seasonal market rally

While 2023 may have felt like a bumpy ride for investors it seems that recession predictions were stymied by a buoyant American economy. Could the road ahead bring in fresh optimism echoing rallies of holidays past?
Read more
5 min read
Nov 14, 2023

Affirm shares surged 24% ahead of holidays splurge

In a world of instant gratification, is buy now pay later (BNPL) just what we do now? While BNPL providers aren't rapidly bringing on more customers and people aren’t using BNPL more, shoppers are missing more payments sinking into a debt cycle helping providers’ revenue to climb. Is this why Affirm’s stock has soared 153% this year?
Read more

More recent news articles

More recent learn articles

6 min read
Nov 28, 2023

Black Friday’s record-breaking US$9.8 billion US online sales, US$70.9 billion globally

New Zealand imported Black Friday from the US, but that doesn’t mean we’re spending up large during tighter economic times. While Black Friday spending soared in the US, it seems Kiwis weren’t quite so keen to part with their hard-earned cash. So who was spending up large in record US Black Friday shopping?
Read more
6 min read
Nov 21, 2023

Underrated Thanksgiving stocks and hopes for a seasonal market rally

While 2023 may have felt like a bumpy ride for investors it seems that recession predictions were stymied by a buoyant American economy. Could the road ahead bring in fresh optimism echoing rallies of holidays past?
Read more
5 min read
Nov 14, 2023

Affirm shares surged 24% ahead of holidays splurge

In a world of instant gratification, is buy now pay later (BNPL) just what we do now? While BNPL providers aren't rapidly bringing on more customers and people aren’t using BNPL more, shoppers are missing more payments sinking into a debt cycle helping providers’ revenue to climb. Is this why Affirm’s stock has soared 153% this year?
Read more