- Chinese sales fall 6.5%
- European sales growth slows
- Sees beauty market up 4% to 5% in 2025
French cosmetics giant L’Oreal (OR:EPA) was on the back foot after missing third quarter sales estimates amid continued weakness in China, sending the shares down 4% to €353.80.
That marks five consecutive quarters of contraction in the Chinese beauty market, a key reason for the shares falling 20% since the start of the year, wiping €50 billion off its market value.
L’Oreal, whose brands include Garnier and Maybelline, said like-for-like sales in north Asia, which is mainly China, fell 6.5% compared with analysts’ expectations for 2.9% growth, and a 2.4% decline in the prior quarter.
In a statement, the company said: ‘In mainland China, the beauty market — already negative in the second quarter — continued to deteriorate, impacted by low consumer confidence.’
Group like-for-like sales for the three months to the end of September grew 3.4% to €10.28 billion, missing consensus forecasts by a wide margin. Sales growth in Europe, the group’s largest region also slowed to 5.6% from 9.7% in the prior quarter.
WHAT DID THE COMPANY SAY?
Chief executive Nicolas Hieronimus commented: ‘We delivered solid growth of 6% in the first nine months, well-balanced between value and volume, despite multiple turbulences that have negatively impacted our third quarter.
‘The situation in the Chinese ecosystem has become even more challenging, but we believe in the future of this market and hope that the governmental stimulus will help improve consumer confidence.’
Commenting on the Chinese market, Jefferies noted the luxury segment dropped the most, registering a fall in the mid-teens, while the mass market segment was slightly positive as consumers likely traded down.
‘There was a lot of tourism in Golden Week, but this did not convert to sales. Overall, the market was quite negative. So year-to-date, the market is cumulatively low-single-digit negative,’ added Jefferies.
L’Oreal’s disappointing sales update follows weak results from luxury goods group LVMH (LVMH:EPA) and Ray-Ban maker EssilorLuxottica (EL:EPA) in recent weeks, who both cited a slowdown in China
