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L’Oréal sales climbed 11.1 per cent like-for-like to €10 billion in the third quarter, the company said on Thursday, in line with analyst expectations, as sluggish travel retail sales in Asia were offset by global gains in key markets like Europe and North America.
The group’s dermatologic beauty category, which includes brands such as Skinceuticals, La Roche-Posay and Cerave, was the top-growing sector with sales up 28.1 per cent for the quarter, followed by consumer products (13.4 per cent), professional products (8.7 per cent) and Luxe (3.2 per cent).
By region, North Asia sales were down 4.8 per cent. All of the other regions reported double-digit growth: Europe was up 16.2 per cent, North America 11.8 per cent, Sapmena (South Asia Pacific Middle East North Africa Sub Saharan Africa) 23.7 per cent and Latin America 25.4 per cent.
“Being in line [with consensus expectations] is not something we usually write about L’Oréal. The drag of travel retail brought North Asia down sequentially. All other divisions and regions made up for this material drag,” writes Bruno Monteyne, senior analyst, personal care at Bernstein. He noted that travel retail also impacted sales for the Luxe category, which includes brands such as Lancôme, Aesop, Kiehl’s and the cosmetics and fragrance licences for luxury brands like Giorgio Armani and Prada.
This comes after L’Oréal first-half sales were up 13.3 per cent. “We are entering the holiday season so we are ambitious for the end of the year,” L’Oréal CEO Nicolas Hieronimus said, pointing to the contribution of top performing fragrances.
L’Oréal competitor Estée Lauder Companies is to report its first-quarter fiscal 2024 earnings on 1 November. LVMH’s Perfumes & Cosmetics division reported 9 per cent organic sales growth to €1.96 billion in the third quarter.
L’Oréal said that travel retail in Asia, notably in Hainan and South Korea was impacted by the change in policy regarding daigous, or traders who take advantage of cross-border price differences to resell luxury goods on the grey market. L’Oréal’s management made it clear it supports the authorities’ regulations on daigou. “Our strategy in the Chinese ecosystem has always favoured mainland China. Daigou is not a strategy, it was a phenomenon we had to live with and we are very happy that it ends and that the market goes back to normal,” Hieronimus told analysts on a call Thursday.
In Europe, all divisions grew in the double digits in Q3. The company didn’t offer an end of year outlook. “We don’t see a slowdown…We have a good performance thanks to our innovations. Beauty is an offer market,” Hieronimus said. He cited Yves Saint Laurent’s new fragrance MYSLF among the “new sophisticated, premium, high quality products” that “are flying”. We manage to grow in unit and value.”
Meanwhile in the US, Lancôme made its debut on Amazon, where 75 per cent of shoppers who buy Lancôme products on the platform are new to the brand. “It’s promising,” Hieronimus said.
“Weakness in North Asia travel retail was offset by strong performance in Europe and emerging markets excluding China,” Bruno Monteyne, senior analyst, personal care at Bernstein says.
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