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L’Oreal North American sales slip as makeup boom slows

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L'Oreal SA's North American sales fell in the second quarter as a makeup boom fuelled by YouTube beauty bloggers and Instagram selfies lost steam.

[PARIS] L'Oreal SA's North American sales fell in the second quarter as a makeup boom fuelled by YouTube beauty bloggers and Instagram selfies lost steam.

The regional downturn created jitters among investors, even as China lifted the world's biggest maker of beauty products to its highest first-half growth in more than 10 years. While the French company reported after the close of trading, US-based rival Estee Lauder Cos. fell as much as 1.9 per cent.

Second-quarter sales rose 6.8 per cent on a comparable basis, L'Oreal said. But North America -- where the company's Maybelline makeup dominates drugstore shelves -- recorded a 1.1 per cent decline.

Makeup has driven growth for the cosmetics industry as online influencers inspired a generation of consumers to make trying new makeup looks a hobby and as the selfie craze gave them a reason to stay camera-ready.

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The slowdown in makeup comes as L'Oreal is also facing mounting competition in North America: the rise of social media-savvy start-ups like Glossier, celebrity-fronted brands like LVMH's Fenty Beauty by Rihanna, and organic products like Juice Beauty mean fewer American consumers are headed for the retail outlets where L'Oreal has dominated shelves for decades.

Growth slowed for L'Oreal's consumer-products division even as the company took steps like re-branding its Garnier brand with a focus on organic and natural products.

The company's high-end products are faring much better. Sales in the luxury division selling Lancome Absolue moisturizer and Yves Saint Laurent concealer grew 12.2 per cent in the second quarter, with the company citing China as driving demand. Chinese clients also boosted sales of luxury companies LVMH and Burberry Group Plc in the latest quarter, even as the country reported its slowest economic growth in nearly three decades.

L'Oreal said it plans to buy back and cancel as much as 750 million euros (S$1.145 billion) worth of shares during the second-half -- a move that could appease investors worried by the slowdown in the mass-market division, the company's largest.

 

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