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L’Oréal sales climbed 13 per cent like-for-like to €10.38 billion in the first quarter, the company said on Wednesday — beating analyst expectations of 7.1 per cent despite ongoing setbacks in China.
The group’s dermatologic beauty category (formerly active cosmetics) led the growth (up 30.6 per cent), followed by consumer products (14.7 per cent), professional products (7.6 per cent) and Luxe (6.5 per cent).
“These are truly outstanding numbers. They grew at nearly twice consensus numbers despite China still being a drag,” writes Bruno Monteyne, senior analyst, personal care at Bernstein. North Asia sales were up 1.9 per cent versus a 7.3 per cent consensus. LVMH’s Perfumes & Cosmetics division reported 10 per cent organic sales growth to €2.1 billion in the first quarter, while L’Oréal competitor Estée Lauder Companies is to report its third-quarter earnings on 3 May.
L’Oréal said the beauty market declined in continental China at the very beginning of the year “as a result of the evolution of the health situation, which led to destocking in January. From February, Chinese consumer demand for beauty resumed as did footfall in brick and mortar.”
The company is bullish on China’s rebound, L’Oréal CEO Nicolas Hieronimus told analysts on a call Wednesday. “I was in China three weeks ago, and I was very impressed with the normalisation,” he said.
All of the other regions reported double-digit growth: Europe was up 16 per cent, North America 16.6 per cent, Sapmena (South Asia Pacific Middle East North Africa Sub Saharan Africa) 26.7 per cent and Latin America 22.3 per cent.
By categories, sales of makeup and fragrances grew in the “mid-teens” while hair and skin “are also dynamic but to a lesser extent”, Hieronimus noted. On makeup, the executive said: “Remember we were talking about the Roaring Twenties? It’s happening now. Makeup is super dynamic. Fragrances follow the same pattern.” (L’Oréal executives had predicted the “Roaring Twenties” style “makeup fiesta” after the pandemic during the company’s annual earnings call in February 2021.)
Asked to comment on the recent blockbuster acquisition of Australian cosmetics brand Aesop for $2.5 billion, Hieronimus said: “It’s a luxury brand, a lifestyle brand of extremely high quality with high-touch service and, of course, naturality, you saw from Natura’s publication that it continues to have high growth and it has been done without China. There are two stores that have opened in China recently. When we were in China a couple of weeks ago, we all went to visit them. They were packed with Chinese consumers who seem to be excited by the brand, which is in sync with their own expectations. China is a potential, travel retail is a great opportunity, as is e-commerce. Their weight of e-commerce is inferior to the average at L’Oréal, so I think we can bring our digital expertise to Aesop.”
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