By Mimosa Spencer

PARIS (Reuters) – The world’s largest cosmetic group L’Oreal is expected to report brisk fourth-quarter sales on Wednesday after pandemic-weary consumers emerged from lockdowns to splash out on beauty products.

Investors will be looking at the effects of L’Oreal’s marketing expenditure on the margin. They can also tune into the executive results presentation on Thursday to see if there are any indications as to whether China’s sporadic coronavirus lockdowns have had an effect on the cosmetics market.

Business targets are not disclosed by the purveyors of Lancome and Maybelline brands. According to the consensus estimates, it is likely to experience like-for-like growth of 9.3% in the final three months of this year. Credit Suisse (SIX:).

With rivals Estee Lauder (NYSE:), L’Oreal is likely to have benefited from higher employment and rising wages in the United States, where consumers have been treating themselves to luxury products as socialising resumed.

The trend is expected to boost L’Oreal’s second-largest division, L’Oreal Luxe, which sells Yves Saint Laurent lipstick and Kiehl’s face cleansers. The unit also acquired Youth to the People (a California-based brand that offers skincare made with vegan ingredients), last year. L’Oreal shares rose 21.5% in the past 12 months.

After cutting advertising and product launches when the pandemic hit in 2020, L’Oreal last year resumed spending on marketing and new products, including a line of Valentino cosmetics.

L’Oreal also changed its emphasis from physical stores to online distribution. It now trains and recruits stylists online, and has enlisted social media influencers to promote brands like its CeraVe skincare range, TikTok.

Credit Suisse estimates that the operating margin will grow by 40 basis points in 2021, despite an increase of 165 point for the first six months.

“Although the company’s strong topline growth and mix impacts might suggest that margin expansion should be stronger, we do not think L’Oreal will stray too far from its proven model of reinvestment and thus modest margin improvements,” Credit Suisse analyst Eamonn Ferry said.

L’Oreal’s market share has increased steadily in beauty and personal care over the past few years. Its 9.8% market share puts it ahead of rivals Procter & Gamble (NYSE:), Unilever (NYSE:) and Estee Lauder in the category, a position it has held since 2016, data from Euromonitor International shows.

Estee Lauder (owner of Clinique and La Mer brands) last week increased its annual revenue projections and profit projections following a return by shoppers to their stores during the holiday season to purchase makeup and skincare.