Beauty's Q3 2026: Dermocosmetics, China and Fragrance Drive Growth

L'Oréal's Dermatological Beauty division grew 13.9 percent in adjusted like-for-like sales in the quarter ended Sept. 30, tying Professional Products as the beauty giant's fastest-growing business and anchoring four takeaways from the industry's Q3 2026 earnings season.

Why is dermocosmetics the category to watch?

The segment, which sits at the crossroads of dermatology and traditional cosmetics, kept rising in importance across the sector. Each of L'Oréal's three billionaire brands in the branch — La Roche-Posay, CeraVe and SkinCeuticals — grew by double digits.

Puig doubled down. The Barcelona-based group announced on Sept. 14 that it agreed to acquire the remaining 50 percent of Isdin for 1.2 billion euros, taking full ownership.

"Dermocosmetics is an area of strategic focus for Puig, as reinforced with the recent announcement [of acquiring] the remaining 50 percent of Isdin," chief executive officer José Manuel Albesa said on a call with financial analysts and journalists. He described Isdin as "at the forefront of skin care, photoprotection and photoaging, rooted in medical credibility" and an important step in Puig's long-term strategy.

Puig expects dermocosmetics to become skin care's fastest-growing category in the years ahead. In the third quarter, its dermocosmetics business — led by Uriage — continued delivering double-digit gains.

Beiersdorf's derma segment posted organic sales growth of 10.6 percent. "Our Derma business, with Eucerin and Aquaphor, once again outperformed the market," CEO Vincent Warnery said in a statement. "The expansion of Aquaphor into body care contributed to the strong growth trajectory." In the quarter, Eucerin launched a microbiome-based solution for acne-prone skin built on the patented cosmetic active ingredient TopiC.A.

Is China back?

Estée Lauder sales in China rose 9 percent, the clearest sign yet that its turnaround strategy is working after a difficult few years in the market.

"The market is healthy in China," CEO Stéphane de La Faverie said, announcing results during a business trip there. "China is no longer what we call an emerging market; it is a mature market of a significant size when it comes to beauty. So a midsingle-digit growth for the industry is very strong. In the midst of that, we are gaining share."

Coty's first-quarter net revenues increased $19.4 million year-over-year in Asia-Pacific, driven primarily by China, Southeast Asia and Asia Travel Retail.

China accounts for more than two-thirds of L'Oréal's North Asia business. "In China, even though the market slowed down a tiny bit in [the third quarter], it remained dynamic at nine months at somewhere between 2 and 3 [percent]," CEO Nicolas Hieronimus said. He noted premium beauty is the most dynamic segment: "At nine months, the luxury market is midsingle digits. The dermatological beauty market is a bit higher than that and professional is midsingle digits. The only part that remains flattish is mass. That's favoring us."

Interparfums SA returned to growth in Asia on China's strength, with regional gains of close to 32 percent for the quarter and 8 percent over nine months.

Procter & Gamble's Greater China organic sales grew 8 percent, helped in part by SK-II. CFO André Schulten called China "in the middle of reinvention."

"We're not firing on all cylinders yet. But we're very happy with the China structural progress, and I have very high levels of confidence that we will fix the remainder of the portfolio and see even more sustained growth in China in a difficult market, because market growth is still below 100 in our channels and categories," Schulten said. "Quite frankly, consumer sentiment is not improving. So a big congratulations to the China team for winning in a tough environment."

Who raised guidance?

A host of companies lifted full-year 2026 outlooks on the back of strong quarters.

• E.l.f. Beauty raised its 2027 net sales outlook to between $2 billion and $2.02 billion, up from $1.93 billion to $1.96 billion. Adjusted net income is now expected at $231 million to $233 million, versus a prior $212 million to $215 million.
• Estée Lauder lifted its fiscal 2027 organic net sales growth forecast to 4 to 5.5 percent, from 3 to 5 percent. Adjusted diluted EPS guidance rose to $3.20 to $3.45, from $3.10 to $3.35.
• Galderma increased 2026 full-year net sales guidance to 22.5 to 23.5 percent on-year constant-currency growth, versus 19 to 21 percent previously.
• Unilever, driven by beauty and personal care, now projects at least 3 percent underlying volume growth for 2026 and second-half underlying sales growth of around 5 percent.

"Our strong performance in the first nine months of 2026 underscores the sustained momentum across our business and strength of our integrated dermatology strategy," Galderma CEO Flemming Ørnskov said in a statement, citing robust demand and the agreement to acquire Zo Skin Health. "Building on this momentum and our confidence in the business, we are raising our full-year net sales guidance."

How strong is fragrance?

Estée Lauder's fragrance sales surged 20 percent in the quarter ended Sept. 30, with double-digit growth at Le Labo, Tom Ford, Jo Malone London, Kilian Paris and the Estée Lauder brand.

De La Faverie pointed to two engines: "There's the strong innovation continuing to expand distribution where it makes sense for our luxury fragrances, but also to capture market share in the prestige category where we haven't had our fair share in the past." The second is younger consumers gravitating toward fragrance via platforms like TikTok Shop.

L'Oréal estimates the worldwide fragrance market is growing by midsingle digits. Its own perfume business was growing close to double digits year-to-date through October, fueled by blockbusters including Yves Saint Laurent's Libre, which ranks first worldwide, and Lancôme's La Vie Est Belle.

"We are on a run with our fragrances," Hieronimus said, adding that the market slowed slightly during the summer heat. "We sold a lot of sun care and a bit less fragrance. But we are now ready for a great holiday season."

Suppliers confirmed the momentum. DSM-Firmenich reported high-single-digit like-for-like growth in fine fragrances. Givaudan's fine fragrance sales rose 31 percent — "a remarkable" beat, in the words of Deutsche Bank analyst Virginie Boucher-Ferte, driven by consumer demand, share gains and broad customer activity across price segments, with a pipeline she expects to sustain strong demand. A fourth quarter of raised forecasts and double-digit category growth now hinges on the holiday selling season.