Glamorous: Jourdan Dunn and Kate Moss apply Charlotte Tilbury lipstick

Glamorous: Jourdan Dunn and Kate Moss apply Charlotte Tilbury lipstick

Cosmetics and skincare stocks should be an easy way to beautify a portfolio.

After all, these companies are players in a high-margin £230billion global market whose wares are persuasively promoted on social media tutorials.

But there is talk of a slowdown in the sector, whose pricing power has been the envy of other businesses. As a consequence, investors looking to ‘zhuzh’ – beauty tutorial-speak for ‘give a lift to’ – their holdings will be paying close attention to the forthcoming flotation of Puig, the Spanish owner of the glamorous British Charlotte Tilbury brand.

Puig, a family-owned business, could be worth as much as £12billion when it makes its debut next month on the Madrid bourse, highlighting the demand for make-up and creams from an ever-wider demographic in Europe and elsewhere.

As David Coombs of Rathbone points out, awareness of skin cancer means that more men are using moisturisers which represents a lasting structural change in the industry.

Meanwhile, ‘tweens’, customers about to enter their teens, constitute a fast-expanding and well-informed clientele, buying for themselves and encouraging their mothers to spend. You can witness this phenomenon in the aisles of Sephora, which is part of the best-performing division of LVMH, the luxe goods giant.

Sephora stocks more costly lines, such as Rare Beauty, the range founded by American actress Selena Gomez, plus the ‘viral dupes’ that supply the looks for less.

Yet suddenly the outlook seems uncertain, despite the popularity of Charlotte Tilbury and the buzz around newer products such as Bum Bum cream from Sol de Janeiro, an Occitane subsidiary.

Analysts at the broker Bernstein estimate that growth in the US this year may be just 7 per cent, against 15 per cent in 2023.

This has led to falls in the shares of L’Oreal, Ulta Beauty, a US chain, and Estee Lauder. This group has been left reeling by supply chain problems in China, although its diverse offer includes the hip Le Labo perfumes and Clinique creams.

Also hit by the more nervous mood have been businesses like ELF (eyes, lips, face).

Shares are down by 15 per cent this month, although 1348 per cent higher over five years thanks to its affordable dupes or alternatives.

Do these declines suggest that the lipstick index thesis (in which expenditure on lipstick and other ‘slap’ rises during tough times) is no longer relevant?

The index was devised by Leonard Lauder, chairman of the group during the recession of the early Noughties.

Or have Estee Lauder’s woes coloured the perception of the entire sector?

Terry Smith, manager of Fundsmith, disposed of the fund’s stake in Estee Lauder earlier this year. However, he continues to hold LVMH, and also L’Oreal, enabling investors in the fund – like me – to have exposure to brands like Lancome and Tween favourite CeraVe.

Coombs has also exploited the dip in Ulta Beauty shares to add to his funds’ holdings.

He points to Ulta’s strengths, including its online sales and social aspect of a visit to its stores which are situated on malls with parking.

Against this background, I am taking a bet on shoppers of all ages continuing to indulge themselves on lipsticks and creams to limit ageing and sun damage.

I have put some cash into Britain’s largest retailer of these items – Boots, the 175-year old business, part of the US-based Walgreens Boots Alliance.

Rumours that its parent will spin-off Boots may have died down. But recently the chain has reported a 15 per cent bounce in sales, helped by the clamour for Sol de Janeiro and the Shiseido brand Drunk Elephant.

This name will either give you laughter lines, or suggest that such is the innovation in this sector that it is worth a gamble.

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