Today 4

Puig delivers steady 8% Q2 growth; sets 2025 decel amid US tariff risk

Bottom Line Impact

Absent mitigation, higher US tariffs will slow 2025 growth to mid to high single digits and pressure gross margin; disciplined price mix, local finishing, and launch focus can preserve EBIT and sustain Puig's share and brand equity in prestige beauty.

Key Roles Affected

CEOCFOCMOCOO

Executive Summary

Puig posted 8% constant-currency growth in Q2 to 1.09b euros, inline with consensus and mirroring Q1 momentum, while signaling a slowdown to 6-8% growth in 2025 after 11% in 2024. The pivot reflects anticipated higher US tariffs and broader category normalization, putting a premium on pricing, mix, and supply-chain localization to defend margins and sustain share.

Actionable Insights

Immediate Actions (Next 30-90 days)
Activate a dual-track mitigation plan: implement a 2-4% US list-price increase on select franchises in Q1 2025 and initiate US final assembly or filling pilots covering 10-15% of US volume by Q4 2025
Rationale: Partial price pass-through and origin reconfiguration can offset duty headwinds while preserving volume on price-inelastic hero SKUs
Role affected:CEO
Urgency level:immediate
Short-term Actions (6-12 months)
Run tariff sensitivity and margin protection playbook: secure USD hedges for 70-80% of next 12 months exposure, lock freight rates, and negotiate supplier cost downs of 100-150 bps on packaging
Rationale: Stabilizing FX and input costs creates room to absorb duties without eroding EBIT margin
Role affected:CFO
Urgency level:short-term
Reweight US marketing to hero pillars and high-LTV cohorts, while pacing newness to 2-3 blockbuster moments in 2025 tied to proven franchises
Rationale: Concentrated spend on price-inelastic franchises and loyal segments improves price realization and reduces promo leakage under tariff stress
Role affected:CMO
Urgency level:short-term
Strategic Actions
Qualify 2-3 US contract manufacturers for secondary filling and packaging; design SKUs with tariff-efficient bills of materials and rules-of-origin compliance
Rationale: Local value-add and compliant design can reduce effective duty burden and lead times by 10-20%
Role affected:COO
Urgency level:strategic

Strategic Analysis

Next 30-90 days focus on US pricing scenarios, retailer sell-in alignment for H2 launches, and investor messaging to reset expectations for 2025 normalization. Lock in promotional guardrails with Sephora and Ulta to protect mix, and pre-position inventory ahead of any tariff effective dates to avoid rush costs.

Over 6-12 months, tariff pass-through and footprint localization will determine margin trajectory. Expect a shift toward mix-accretive franchises and US-made final assembly or filling to mitigate duties, plus tighter opex discipline to hold FY25 EBIT margin flat to down modestly despite slower growth.

Beauty remains the relative outperformer within luxury, but growth is normalizing from the post-pandemic fragrance boom. Coty and Inter Parfums are pushing aggressive launch calendars, while L'Oréal Luxe and Estée Lauder regroup in the US and Travel Retail. Puig's consistent 8% growth and strong franchises support share defense, but tariff friction could hand an advantage to players with deeper US manufacturing footprints.

Suppliers of glass, pumps, and alcohol face potential order phasing as Puig times US-bound production. Retail partners may see tighter allocation on hero SKUs to protect price integrity. Logistics and customs brokers become critical to optimize country-of-origin rules, drawback programs, and duty timing.

Risks & Opportunities

Primary Risks

  • Higher-than-anticipated US tariffs compress gross margin if pass-through lags
  • US consumer softness or increased promotional intensity erodes price realization
  • Retailer inventory rebalancing in H1 2025 slows sell-in and elevates returns

Primary Opportunities

  • Selective pricing on hero franchises with low elasticity protects margin
  • Footprint localization and duty-drawback optimization reduce landed cost
  • Travel Retail recovery and China fragrance penetration support mix and volume

Market Context

Luxury beauty growth is normalizing after two years of outperformance; fragrance remains resilient but faces tougher comps. China demand is uneven, with makeup and niche fragrance adoption offsetting macro caution, while the US is stable but more promotion sensitive. Competitors with US manufacturing capacity hold a cost advantage under tariff scenarios; Puig's brand equity and hero franchises provide pricing power, but success will hinge on agile supply-chain design and disciplined channel management.

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