L’Oreal sales disappoint on slowdown in Europe, North Asia

[LONDON] L’Oreal’s sales missed expectations in the second quarter as the French beauty-products company faced weaker demand in North Asia and a slowdown in Europe, its biggest market.

Like-for-like sales rose 2.4 per cent, the maker of shampoo and cosmetics brands such as Garnier and Lancome said on Tuesday (Jul 29). Analysts had expected a 2.7 per cent gain. European sales rose 2.4 per cent, well below the 4.2 per cent analyst consensus.

L’Oreal, along with the rest of the beauty industry, has been grappling with consumer uncertainty as US President Donald Trump imposes his tariff agenda, triggering fears of a hit to global economic growth. The sector is also facing slowing demand for skincare and makeup in Europe, particularly in France, David Hayes, equity analyst at Jefferies, said in a note last month.

L’Oreal’s American depositary receipts traded 1.6 per cent lower after the company’s update. Shares of L’Oreal have rallied 9.3 per cent this year, though they are still almost 5 per cent lower than 12 months ago.

North America sales rose 8.3 per cent, well above the consensus 4 per cent among analysts, with L’Oreal citing demand for haircare products including Kérastase shampoo. Market conditions showed “clear signs of improvement”, the company said.

Meanwhile, China returned to growth in the second quarter, according to L’Oreal, though like-for-like sales in North Asia, which includes the mainland, fell 8.8 per cent, exceeding the 6 per cent drop analysts expected.

L’Oreal has been contending with a sharp spending decline in China, where confidence has been hit by stagnant wage growth and high youth unemployment.

Comparable sales in L’Oreal’s dermatological beauty unit, which has been a driver of growth and includes labels such as CeraVe and La Roche-Posay, rose 3.5 per cent, below analyst estimates. BLOOMBERG