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Mexican Beauty Feels the Trump Blues

Beauty sales slumped by as much as 30 percent to 40 percent during the holidays, according to department store sources.

MEXICO CITY — Mexico’s beauty business is facing a challenging future following a bumpy ride through the holidays. Sales fell 30 percent to 40 percent during the holiday season as consumers worried about a bleaker economic outlook and soaring inflation, according to sales managers at leading department stores.

“People are worried and asked for more discounts,” said a sales manager at retailer Sanborns’ store in the capital’s trendy Condesa quarter. “They preferred to pay in cash instead of with credit cards because interest rates will rise next year.”

The representative said the store’s recent remodeling helped boost sales during Christmas, which otherwise would have been flat.

Beauty sales appeared to perform just as badly as apparel, which fell below targets at a number of department stores.

The anti-Mexico attacks of President-elect Donald Trump — his threats to impose 35-percent export tariffs and cutting remittance income — appear to have put consumers on tenterhooks.

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Central Bank Governor Agustin Carstens recently said Trump is “like a horror movie” for Mexico, announcing that his policies could cut gross domestic product growth to 1.5 percent from a 2.5 percent percent earlier forecast and announcing his departure. Ratings agencies and economists have painted a dimmer outlook, saying Latin America’s second economy could enter a mild recession in 2017.

Trump’s win did not stop some retailers from pursuing their expansion plans.

Grupo Carso, which is owned by Carlos Slim and runs Sanborns, Sears and Saks Fifth Avenue Mexico, said a day after Trump won that it will spend 2.6 billion Mexican pesos, or $122 million at current exchange rates, to open and remodel six Sanborns in 2016. It also rang in the new year with nine new Sears and six remodeled ones.

That said, the Sanborns Condesa outlet, which operates alongside a newly refurbished Sears, discounted its top makeup brands L’Oréal Paris, Maybelline, Rimmel and E.l.f. Cosmetics by 30 percent during Christmas, the manager said. It now offers an additional 10 percent off to customers using the store’s credit card and will likely offer new 20 percent discounts during the Three Kings holiday on Friday.

At the revamped Sears next door, sales people said turnover was similar to last year but noted there were significantly more promotions.

Luxury department-store network El Palacio de Hierro is facing a similar situation, with one beauty manager reporting sluggish turnover for the Buen Fin [Mexico’s Black Friday] and the run-up to Christmas.

“Usually we have to grow our sales by at least 40 percent over the previous year but so far, they are only up 10 percent,” she said.

Helped by new launches and package discounts, Dior fragrance sales surged 70 percent, compared to 30 percent last time, said a sales person. Carolina Herrera’s new Good Girl eau de parfum stole the show while Chanel No. 5 also did well at the 126-year-old chain’s maiden store in downtown Mexico City. In fact, Good Girl, Chanel and Dior led sales across department stores, according to the sales people.

The chain’s first private-label fragrance, Esencia de El Palacio, also met its holiday targets, another staffer noted, thanks to a “very aggressive marketing campaign.”

An El Palacio spokeswoman declined to provide sales figures while Carso also declined comment on Christmas sales and Liverpool did not return a call.

Archrival Liverpool is also feeling the pinch, with a sales associate at one of its large stores in Mexico City’s Parque Delta mall, reporting that turnover fell around 20 percent compared to last Christmas.

“There was less traffic and we are worried about next year,” she said.

While the department was bereft of sale signs, gift baskets were in plain sight with Spanish brand Tous heavily promoting its new fragrances through ceiling-hanging ads.

“People were definitely looking for more deals this year and there were many more gifts-on-purchase discounts,” she said.

At the main store front, huge billboards beamed the discounts, reading “Goodbye all merchandise. Up to 40 percent with 9 months no interest.”