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Unilever reports strong ecommerce sales growth, and warns of rising prices

which includes Dermalogica. Screenshot of

Unilever today reports that ecommerce sales grew by 44% in its latest financial year to account for 13% of its turnover.

The brand organisation has reorganised itself into five divisions – and is selling off its tea business. Ecommerce was a particularly big contributor to the sales of Unilever’s prestige beauty brands, in its beauty and personal care division.

During the year, Unilever bought US prestige skincare company Paula’s Choice, which already had an established direct-to-consumer ecommerce business, while existing brands include REN, Dermalogica and Tatcha. Dermalogica and REN, for example, have transactional brand websites, while its Hourglass beauty brand sells well via third party multichannel retailer Space NK.

In its home care division, meanwhile, Omo laundry liquid is the second leading ecommerce brand in its category in China. Indeed, double digit growth in Unilever’s brand sales in China were led by online sales.

The update comes as Unilever today reported turnover of €52.4bn (£44.1bn) in its 2021 financial year. That’s 3.4% up on the previous year. Net profit of €6.6bn (£5.6bn) was 9% up on the previous year. Fourth quarter turnover of €13.1bn (£11bn) was 8.4% ahead of last time.

Unilever said that it had seen its fastest underlying sales growth (+4.5%) in nine years, of which 2.9% was from price raises and 1.6% from volume – as it sold more products. In the fourth quarter alone, prices rose by 4.9%.

Looking ahead, the company expects sales to grow by between 4.5% and 6.5% in 2022 but wins that costs – from raw materials to energy – are likely to grow by €2bn in the first half of the year. That could subsequently moderate to €1.5bn, depending on how commodity, freight and packaging costs change and is likely to have a knock on effect on prices.

Unilever chief executive Alan Jope says: “Our thirteen billion-Euro brands grew 6.4%. Priority markets of China, India, and the US grew at 14.3%, 13.4%, and 3.7% respectively. Our growth in ecommerce was 44%, ahead of global channel growth and bringing ecommerce to 13% of turnover. We have continued to re-shape our portfolio into high growth spaces, acquiring in prestige beauty and functional nutrition, and agreeing the sale of our tea business.

“The major challenge of 2021 has been the dramatic rise of input costs. We responded with pricing actions, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with full year underlying operating margin down 10bps and underlying earnings per share up 5.5%.

“We are focused on driving faster growth from our strong portfolio of brands and markets, and recently announced a major change to create a simpler, more category-focused organisation designed to further improve performance. In 2022, we will manage a significant input cost inflation cycle and will continue to invest competitively in marketing, R&D and capital expenditure.”

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