In an otherwise uneven first quarter for LVMH, Sephora continued to demonstrate its value as a standout performer in the group’s global retail portfolio. While overall organic revenue declined 3% year-over-year to €20.3 billion ($21.9 billion), weighed down by double-digit softness in Asia and a 3% drop in the U.S., Sephora remained one of the few areas of growth.
“Despite a demanding comparison basis, Sephora continued to grow in the first quarter,” said Rodolphe Ozun, director of financial communications at LVMH, on the company’s April 14 earnings call. “The success of its exclusive brand curation strategy resulted in good growth in brick and mortar.”
The brand’s steady momentum was especially visible in its North American operations. Sephora’s shop-in-shop partnership with Kohl’s, launched in 2021, now encompasses over 1,100 stores, and its experiential strategy is gaining traction. In January, Sephora premiered its original film “Beauty & Belonging” at the Sundance Film Festival, reinforcing its values-driven branding.
Sephora is also using exclusivity as a competitive lever. Throughout 2024, it launched Rare Beauty’s new skin-care line in January and introduced the Tatcha Indigo Collection in September, each with tailored merchandising and influencer-backed rollouts. These campaigns were supportd by its long-standing in-house creator program, Sephora Squad, first launched in 2019 and now consists of over 100 micro- and macro-influencers.
“We continue to gain market share,” said LVMH CFO Cécile Cabanis during the earnings call. “The model, which really made Sephora differentiated, is continuing to work well.”
But even as Sephora strengthens its position in premium beauty, macroeconomic and competitive headwinds are mounting. In the U.S., e-commerce has been a slower channel for the brand, according to Cabanis. “We have a bit less momentum when it comes to e-commerce, especially because Amazon is being very aggressive,” she said. “And being aggressive is mostly regarding pricing. We try to avoid this technique.”
Amazon’s ongoing expansion in prestige beauty is notable. Since 2023, the retailer has added La Mer (August 2023), Augustinus Bader (May 2024), and Dr. Barbara Sturm (January 2025) to its gated Premium Beauty and Luxury Stores programs. Meanwhile, its fourth-quarter North America segment revenue, reported in February, reached $115.6 billion, up 10% year-over-year. Its operating income climbed 61%, with gains attributed in part to high-margin categories like personal care and skin care.
Despite strong 2023 growth and global expansion, Sephora’s dominance is being tested by Amazon, which is projected to reach a 15% beauty market share by 2030. Still, Sephora’s strategy remains focused on preserving its selective edge and avoiding price-based competition, even as digital channels reshape consumer behavior.
Overall, the retail environment is becoming more complex. As new U.S. tariffs approach, pricing flexibility is a consideration, especially in more cost-sensitive categories. “You have more pricing power when it comes to core luxury brands rather than wine and spirits, and also beauty,” said Cabanis. “It’s a very detailed, precise and important work that we need to do quietly.”
According to Neil Saunders, managing director at GlobalData, the broader impact of tariffs could blunt volume growth in beauty. “Tariffs will be broadly unhelpful for beauty and will push up prices,” he said. “That might dampen some volume growth and push consumers into looking for cheaper options.”
For now, though, Sephora remains a stronghold, with global brand equity, exclusive product pipelines and physical discovery experiences that continue to draw shoppers in. As Cabanis put it: “We continue to witness across our brands the merits of innovation and creativity. When new products are exciting and functional, they perform very well.”
