L’Oreal posts sales gain that outpaces analysts’ estimates
L’OREAL sales rose more than expected, with the cosmetics maker reporting strong demand across regions and business divisions.
Like-for-like sales in the first quarter gained 13 per cent, the owner of the Maybelline New York label said on Wednesday (Apr 19). Analysts had expected a gain of 8.1 per cent. Growth in North Asia, which includes China, was 1.9 per cent, the only region to trail market estimates. The company said that was due to a lack of enough merchandise to meet demand at the beginning of the year.
L’Oreal shares have gained nearly 30 per cent so far this year as the beauty company benefits from a global footprint and a wide product offering, which ranges from affordable Garnier shampoos to high-end Helena Rubinstein skin creams. Despite inflation creeping up and squeezing household budgets, the group was able to grow last year.
The company’s consumer-products investment helped to lead sales growth, with like-for-like sales of nearly 15 per cent, versus an expected 9.5 per cent. By the same measure, Active Cosmetics surged almost 31 per cent, nearly double analysts’ average estimate. Comparable-sales growth in Europe and Latin America both came in at more than double expectations.
“This performance, which has yet to benefit from China’s reopening, demonstrates the strength of L’Oreal’s balanced multipolar model,” chief executive officer Nicolas Hieronimus said in a statement.
Investors will be closely watching for commentary on China — the reopening of the world’s second-largest economy has given a boost to global consumer brands, including luxury names. Last week, Hermès as well as LVMH, the owner of Christian Dior and Louis Vuitton, saw their quarterly revenue jump, in part thanks to Chinese shoppers.
L’Oreal said earlier this month it’ll buy Aesop in a deal valued at US$2.53 billion on an enterprise value basis. The Australian soap brand will be part of its luxury division once the deal closes later this year, joining brands such as Lancôme. Analysts have said Aesop has room to grow in China where it currently has a small presence.
L’Oreal’s performance this year has boosted the fortune of its biggest shareholder, Françoise Bettencourt Meyers, 69, who owns close to 35 per cent of the company founded by her grandfather. The French heiress is the wealthiest woman on the Bloomberg Billionaires Index. In her native country, her riches are surpassed by those of LVMH chief executive officer Bernard Arnault, now the world’s wealthiest person. BLOOMBERG
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