L’Oréal has reported a 5.3% rise in second-quarter sales, below expectations and likely further rattling investors already worried about the lack of rebound in the key Chinese market.
The French cosmetics giant, which owns the Maybelline and Lancôme brands, said on Tuesday that sales in the quarter reached €10.88 billion.
This was up 5.3% on a like-for-like basis compared to a year earlier, but it was below Visible Alpha's 5.9% growth seen in a consensus compiled by Visible Alpha.
China
The Paris-based company reported negative growth in the North Asia region, hit by weak consumer confidence in China and compared with the strong surge in demand at the same time a year ago.
L’Oréal chief executive Nicolas Hieronimus had said last month that the global beauty market was growing more slowly than previously expected.
It was growing at a rate of about 4.5%-5% largely due to a lack of rebound in the Chinese market.
Shoppers in China, which had been one of the world’s fastest-growing beauty markets – are cutting back on spending over worries about job insecurity and a prolonged real estate slump.
The world’s number two economy grew less than expected in the second quarter, prompting consumers to buy fewer cosmetic products both online and in-store.
L’Oréal – whose products span the mass market to the high-end luxury segment – expected to outpace its peers, but still see the impact of broadly slower growth.
Its sales in North Asia, which come mostly from mainland China, were down 2.4% like-for-like, compared to a decline of 1.1% in the first quarter.
The company said in a statement, ‘In mainland China, the beauty market was negative in the second quarter on a tough comparison base, exacerbated by lasting low consumer confidence.’
Luxury bellwether LVMH last week said its perfumes and cosmetic sales grew 4% in the second quarter, slowing from 7% in the first three months of the year.
Shares in L’Oréal – Europe’s sixth most valuable listed company with a market capitalisation of about €211 billion – have lost 12% so far this year, compared to a 31% fall at US peer Estee Lauder.
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