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L’Oréal said fourth-quarter sales rose 6.9 per cent on a like-for-like basis to €10.6 billion, falling below analyst expectations of 9.5 per cent, due to a difficult sales environment in Asia.
In L’Oréal’s fourth quarter, North Asia, which includes China, fell 6.2 per cent, while sales growth was led by Europe (11.6 per cent) and North America (9.4 per cent).
“North Asia continued to be impacted by the reset in travel retail following the change in policy regarding daigous,” the beauty conglomerate said in a statement. The company will host a conference to discuss the fourth-quarter and full-year earnings on Friday morning.
“The miss comes almost entirely from China,” writes Bruno Monteyne, senior analyst at Bernstein. “Travel retail is still a bigger drag than expected, but Mainland China was possibly in decline as well.” Monteyne adds that based on full-year sales in Mainland China, estimated sales in the region for the fourth quarter were likely flat or up 2 per cent.
Some beauty conglomerates continue to be weighed down by the travel retail reset and sluggish sales in the critical Chinese market. Estée Lauder Companies said organic sales fell 8 per cent for the quarter (the American beauty giant also announced plans to cut between 3 to 5 per cent of its workforce). LVMH’s perfumes and cosmetics division fared better, with organic sales up 10 per cent in the fourth quarter. Coty posted sales up 11 per cent.
At L’Oréal, the dermatological beauty division, made up of skincare brands including Skinceuticals, Cerave and La Roche-Posay, was the top performer by category, with sales up 27.3 per cent in Q4. La Roche-Posay was the number one growth contributor for the division in 2023. L’Oréal doesn’t break out individual sales by brand.
The luxe division (including Lancôme, Yves Saint Laurent Beauté and Helena Rubinstein) was roughly flat in Q4, weighed down by China. Consumer products (Maybelline New York, L’Oréal Paris) and professional products (L’Oréal Professionnel, Kérastase) grew 7.7 per cent and 6.4 per cent, respectively.
Sales for the full year amounted to €41.2 billion, up 11 per cent year-on-year.
“In a challenging environment of geopolitical tensions, inflationary pressures and a stagnating beauty market in China, we delivered our best like-for-like growth in more than 20 years (excluding 2021),” L’Oréal CEO Nicolas Hieronimus said in a statement. “As we head into 2024, we remain optimistic about the outlook for the beauty market, and confident in our ability to keep outperforming it and to achieve another year of growth in sales and profits.”
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