Impact of a Weak US Dollar on Beauty Companies
The declining value of the US dollar is already affecting international beauty brands, with sales for 2025 expected to take a hit. It seems the dollar might weaken further in the upcoming year, which could worsen the situation significantly.
This currency plays a vital role for both large corporations and smaller brands. Last year, the US dollar performed poorly compared to other major currencies, notably with the euro gaining about 13.7% against it.
For many beauty companies, the US represents a crucial market. North America is actually the second-largest region for L’Oréal, the world’s leading beauty products company.
In the initial three quarters of 2025, currency volatility already impacted L’Oréal negatively by 2.8%. If you consider the exchange rate as of September 30 (1 euro equals $1.173), the projected hit on sales for the year could reach around -3.8%.
Similarly, Interparfum SA adjusted its sales forecasts to the lower end of its original range back in July, citing the euro’s rise against the dollar as the culprit. Later, in mid-November, there was another downwards revision, with 2026 sales expected to be influenced by economic challenges and a negative euro-dollar exchange rate estimated to cost around 20 million euros.
A weaker dollar raises costs for American consumers and businesses when buying imported goods, which contributes to inflation. Meanwhile, many people’s wages aren’t keeping pace with these price increases.
In response to these changes, some beauty companies raised their prices in 2025. For instance, Puig, a Spanish firm, implemented mid-single-digit price hikes in August.
This issue doesn’t only impact European beauty brands. Many firms in regions like Latin America, the Middle East, Africa, and parts of Asia also operate in dollars. Consequently, even in a market where consumers are already reluctant to pay more, companies may have to further increase prices—a considerable challenge.
According to McKinsey’s State of Beauty 2025 report, there’s growing pressure on brands to justify their pricing across various categories. While a significant 83% of consumers believe hair care is affordable, that confidence drops to just 67% for fragrances.
To effectively navigate this situation, brands should enhance their consumer segmentation strategies, emphasize unique selling points in promotional efforts, and devise entry-level options for discerning beauty shoppers, McKinsey suggested.
Interestingly, a weaker dollar also makes US-made brands more competitive against foreign options—an aspect of former President Trump’s America First policy.
As noted by Eric Henry, founder of EH4B consultancy, “The effect of a weaker dollar will surpass that of import taxes.”
Looking forward, experts indicate that the dollar’s decline shows little sign of abating.
“The US dollar faces another tough year ahead,” remarked Georgette Boele, a senior strategist at Besman Bank, emphasizing that current US fiscal policies and budget deficits are likely to maintain downward pressure on the dollar.
However, some believe upcoming changes in US fiscal policy, particularly with rising interest rates in the next six months, could provide relief and potentially allow the dollar to bounce back. If that happens, it might ease the currency-related troubles within the beauty sector.
