FASHION SYSTEM

L'OREAL SEES IMPRESSIVE 9.4% RISE IN Q1 SALES

FASHION SYSTEM
L’Oréal, the global leader in cosmetics, exceeded market expectations with a remarkable 9.4 percent increase in first-quarter sales on a like-for-like basis. Announcing sales totaling 11.24 billion euros ($11.98 billion) for the period ending in March, the French cosmetics titan outpaced analyst forecasts that projected a more modest 6.1 percent rise, according to Jefferies. The company's reported sales also showed substantial growth, with an 8.3 percent increase.

Despite concerns over a potential slowdown in critical markets like the United States and China, L’Oréal demonstrated robust performance, particularly in North America and Europe, where sales surged by more than 12 percent. This growth comes at a crucial time, especially given recent market anxieties sparked by comments from Ulta Beauty about a sharper-than-anticipated deceleration in the U.S. market, which had previously caused stocks across the sector to tumble.

The company's diverse portfolio, especially its mass market range including the L’Oréal Paris brand and dermatological products such as La Roche-Posay and Cerave, played a significant role in compensating for softer performances in the luxury segment. The consumer products division alone, which features popular items like L’Oréal Paris mascaras and Elvive hair gloss, grew by an impressive 11.1 percent on a like-for-like basis, fueled by strong demand across Europe and emerging markets.

The dermatological unit, though smaller, showed remarkable growth of 21.9 percent. This unit has continued to gain traction thanks to medical endorsements, highlighting the increasing consumer shift towards health-oriented beauty products.

While the luxury division experienced challenges, particularly in North Asia due to a tough comparison base in travel retail and slower market growth in mainland China, it still managed to eke out growth of 1.8 percent. This was a notable achievement considering the difficulties posed by Chinese regulatory measures against the reselling of foreign products, which impacted travel retail sales.

Despite these challenges, L’Oréal's strategic positioning and expansive product range allowed it to perform well in contrast to the broader market conditions in China, where the company reported a growth of 6.2 percent compared to the overall market growth of less than 1 percent. Nicolas Hieronimus, Chief Executive of L’Oréal, acknowledged the market's slower-than-expected rebound but remained optimistic about the company’s ability to outperform the market.

In response to the earnings release, L’Oréal's American depositary receipts (ADRs) saw an increase of up to 6.5 percent in New York trading, positively influencing shares of U.S. rivals such as Estée Lauder and Coty.

Despite a 6 percent decline in its shares this year, L’Oréal maintains a strong market position with a valuation of approximately 220 billion euro ($234.26 billion), making it Europe's sixth-most valuable listed company.

L’Oréal's continued growth amid fluctuating global economic conditions demonstrates its resilience and adaptability, underscoring its leading position in the cosmetics industry and its capacity to maintain momentum through diversified product offerings and strategic market engagement.