Business Express is an online portal that covers the latest developments in the world of business and finance. From startups and entrepreneurship to mergers and acquisitions, Business Express provides reporting on the stories that matter most to business leaders and decision-makers.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
2024 10 22T160825Z 1 LYNXMPEK9L0LY RTROPTP 4 RESULTS LOREAL
2024 10 22T160825Z 1 LYNXMPEK9L0LY RTROPTP 4 RESULTS LOREAL

L’Oreal third quarter sales disappoint as China spends less on beauty


 

By Dominique Patton

PARIS (Reuters) -French cosmetics giant L’Oreal reported a rise in third quarter sales on Tuesday that missed expectations after low consumer confidence in China sapped demand for beauty products.

The company, which owns the Maybelline and Lancome brands, said sales for the three months to the end of September were 10.28 billion euros ($11.11 billion), a 3.4% rise on a like-for-like basis at constant exchange rates, but below a Visible Alpha consensus of 6% cited by Jefferies.

“The last time L’Oréal reported quarterly organic sales growth lower than this was Q3 2020 in the darkest days of COVID,” analysts at RBC wrote in a note.

The scale and breadth of the miss is likely to be taken negatively by investors, Barclays analysts said further.

“While investors were nervous going into results, these are still weaker than feared,” they said.

Shares in Paris-based L’Oreal have lost 20% since June, wiping about 50 billion euros off its valuation, on investor concerns about consumption in China.

The North Asia region, dominated by China, accounts for a quarter of group sales, but a property crisis and high youth unemployment in the world’s No. 2 economy has curbed consumer spending.

Sales in North Asia declined 6.5% in the third quarter, worsening from a decline of 2.4% in the prior three months.

‘NOT GOOD ENOUGH’

Chief Executive Nicolas Hieronimus said the drop in the market in China was high single digits in the third quarter and the luxury segment fell the most, in “negative mid-teens”.

“We are doing better than a very negative market but it’s not good enough,” he said.

Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.

Data on the wider economy on Friday showed China grew at the slowest pace since early 2023 in the third quarter, while luxury bellwether LVMH said last week consumer confidence in the country was at an all-time low.

LVMH, Ray-Ban maker EssilorLuxottica, and Salvatore Ferragamo all blamed China weakness for missed third quarter sales estimates last week.

Reduced demand for suncare and dermatological products also eroded growth at L’Oreal, with the Dermatological Beauty division, which has been the fastest growing, slowing to 0.8%, compared with 10.8% in the second quarter.

The miss was partly attributed to lapping a 57 million euros insurance payout in the prior year’s same quarter, but was still disappointing, said analysts at Barclays.

“We need to bring new stuff to get consumers excited,” Hieronimus told analysts on a call, noting that the biggest area of slowdown in the division was in the U.S. where there had been few innovations.

“Young GenZs went to try other brands. It’s up to us to recruit them,” he added.

The company also experienced slower growth in emerging markets outside China.

Sales growth in Europe, L’Oreal’s biggest region at a third of group sales, slowed in the third quarter too, as predicted, but the North American region did better, with sales up by 5.2%, accelerating from the earlier quarter, helped by booming haircare and fragrance demand, Hieronimus said.

The company aims to increase the number of launches next year, he added, as it no longer benefits from the tailwinds of resurgent demand after the pandemic and inflation.

($1 = 0.9255 euros)

(Reporting by Dominique Patton; editing by Barbara Lewis)

 

Recent Post: