L’Oréal’s fourth-quarter sales experienced a slowdown, rising 6% on a like-for-like basis, which fell short of analysts’ expectations of approximately 6.5%. While the beauty giant saw robust performance in Europe and North America, a weaker showing in its luxury division and the crucial North Asian market, particularly China, tempered overall growth.
Despite the overall miss, L’Oréal reported a strong 8.6% sales increase in North America, attributed to successful new product introductions such as the L’Oréal Paris Plump Ambition lip oil. Europe, the company’s largest market, also showed healthy revenue growth of 7% in the fourth quarter.
However, the North Asia region, which encompasses China, experienced a mere 0.6% sales growth, significantly underperforming the expected 5.6%. L’Oréal noted that while the mainland Chinese market is gradually stabilizing, the travel retail segment remains challenging.
The company’s luxury division also contributed to the slower-than-anticipated growth. This segment, which includes high-end brands, faced headwinds that impacted the overall sales figures.
Following the announcement of the sales figures, L’Oréal’s shares saw a decline on the stock market. The missed forecasts have raised concerns about potential weakness in its luxury brands and the broader market conditions in China, where consumers are increasingly favoring local brands and shoppers in the US are exercising more caution with their spending.
L’Oréal has been implementing strategies to counter these trends, including a “beauty stimulus” plan aimed at accelerating product innovation and driving sales. Analysts from JP Morgan have noted that L’Oréal has been gaining market share in categories like conditioners, shampoo, and face creams, according to recent data.
Despite the recent dip, L’Oréal’s shares have shown a positive trend year-to-date, indicating underlying investor confidence in the company’s long-term prospects.