Beauty retailer Douglas tempers growth forecasts for 2026 and beyond

Beauty retailer Douglas cut its sales guidance for 2026 and beyond on Thursday, as a cautious sentiment among shoppers weighs on its core markets in the western and central parts of Europe.

The German group expects sales of 4.65 billion to 4.80 billion euros ($5.46 billion to $5.64 billion) in 2026, up from the 4.58 billion it reported for the financial year through September, but below the 5-billion-euro target it had set in 2023.

The personal care and beauty sector has seen weakening demand as lower-income shoppers become more reluctant to pay a premium for branded goods.

Sales growth, which was mainly driven by Central and Eastern Europe, was held back by Douglas’ sluggish key markets in Germany, Austria, Switzerland, the Netherlands, Belgium and France, which make up around two-thirds of its revenue.

Douglas’ new medium-term guidance targets yearly sales growth in a low- to mid-single-digit percentage, compared to its 7% average growth target from 2023.

Its shares fell up to 10.6% in early trading before paring some losses to trade 4% lower by 1157 GMT.

Douglas reported slightly lower than expected adjusted core earnings (EBITDA) of 768.4 million euros for the year, weighed down by consumers’ higher price sensitivity and promotional competition.

The debt-laden company reiterated that it would consider paying a dividend once it reaches its net leverage target, which aims for a debt level between 2.0 and 2.5 times its adjusted earnings. At the end of September, this ratio stood at 2.9.

DOUGLAS EYES MIDDLE EAST EXPANSION

The perfume and cosmetics retailer, which sells products ranging from its own brands to luxury names like Chanel and Dior, said it was evaluating an expansion from continental Europe into the Middle East and the Gulf region.

A final decision will be made next year and the expansion into Gulf countries could happen in 2027, CEO Sander van der Laan said in a call with analysts.

“We expect a significantly smaller number of new store openings in the outer years (in Europe),” he said, adding that this would create some space for expansion in the investment budget.

Douglas is in talks with potential partners in the region, but no plan has been approved yet, he added.