L’Oreal sales undershoot in Asia, beat forecasts in North America

By Dominique Patton

PARIS, Feb 12 (Reuters) – L’Oreal’s fourth-quarter sales grew 6%, it said on Thursday, after strong demand for the group’s haircare and makeup in Europe and North America compensated for barely any growth in North Asia.

Sales in North Asia, mainly China, grew 0.6% compared to analysts’ expectations of 5.6% growth in the world’s second biggest beauty market, and after the group posted a 4.7% rise in the region that generates a quarter of its revenues in the prior three months.

Investors will likely be disappointed by the lack of a continued rebound in North Asia, said David Hayes, an analyst at Jefferies.

L’Oreal’s U.S.-traded shares were down 7.7% at 1851 GMT.

The Paris-based owner of Maybelline make-up and Kerastase shampoo said travel retail remained “challenging”, though the mainland Chinese market was “gradually stabilising”.

Overall sales for the three months to end-December came to 11.3 billion euros ($13.42 billion), up 6% on a like-for-like basis, versus expectations for a 6.3% rise in an analysts’ consensus compiled by Visible Alpha.

In recent quarters, consumers in China have been opting for cheaper local brands, cautious shoppers in the U.S. have been curbing spending, while independent brands have been taking market share.

L’Oreal is usually cushioned by its global presence and wide range of products spanning mass market makeup to luxury perfumes and skincare sold in clinics.

Purchases of creams and makeup have picked up in the top cosmetics market of the U.S., L’Oreal executives previously said. L’Oreal said its sales in North America rose 8.6% in the fourth quarter, above the Visible Alpha consensus forecast of 7.9%, thanks to new product launches like L’Oreal Paris Plump Ambition lip oil.

L’Oreal launched a ‘beauty stimulus’ plan last year to speed up bringing new products to market and drive sales. The company has taken market share in conditioners and shampoo as well as face creams, said JP Morgan analysts citing NielsenIQ data earlier this month. 

Shares in L’Oreal are up about 7% year to date, while beauty-to-hygiene products maker Unilever is up 10% and smaller peer Beiersdorf has gained 12%.

(Reporting by Dominique Patton;Editing by Elaine Hardcastle)