French cosmetics giant L’Oréal announced on Thursday, April 17, a 4.4% increase in sales to 11.73 billion euros (13.34 billion US dollars) in the first quarter, despite a “more difficult than expected” market in the United States, amid inflation and rising customs duties imposed by Donald Trump.
“In what has been a particularly challenging and volatile operating environment, L’Oréal has started the year with growth in line with our projections. There were some good and some less good surprises: the US were more challenging than anticipated, while China was slightly better than expected. Europe was, once again, our single largest growth contributor and emerging markets remained dynamic,” said CEO Nicolas Hieronimus.
“In the current context, our priorities are to drive growth and manage our P&L to offset the impact of tariff hikes – with the benefit of an already very healthy gross margin,” he added.
Hieroniums said he was “confident” that the group would continue to outperform the global beauty market, “which we expect to grow even amidst the current economic and geopolitical tensions,” and “to achieve another year of growth in sales and profit.”
“We expect growth to accelerate progressively,” he added.
Market slowdown in North America
In North America, “a slowing market,” according to L’Oréal, the group’s sales fell by 1.4% to EUR 2.97 billion, suffering from accounting effects due to the implementation of a new IT system, according to L’Oréal. Excluding this effect, growth in the United States and Canada was 0.5%.
In North Asia, the group’s revenue rose by 8.4% to EUR 2.95 billion, driven in part by “a positive impact” related to the anticipated rollout of new IT systems in mainland China, according to the company. It added that this country, “the beauty market is slowly recovering, being almost flat in the first quarter.”
Sales in Europe increased by 4.9% to 3.9 billion euros, “driven by the Spain/ Portugal and UK/ Ireland clusters, Italy as well as most countries in Central Europe.”
Double-digit growth in perfume
By category, the luxury division (Lancôme, Yves Saint Laurent, Armani, Kiehl’s, etc.) remains the most dynamic with an increase of 7.3% to 4.1 billion euros.
While all categories contributed to growth, the Division’s sales in fragrances grew in double digits, “outperforming the market with spectacular performances in both the feminine and masculine segments – including Libre and MYSLF by Yves Saint Laurent, Born in Roma by Valentino, Paradoxe by Prada, Idôle by Lancôme, Emporio by Armani, and Wanted by Azzaro.“
Sales of consumer products (Garnier, Maybelline, L’Oréal Paris, NYX Professional Makeup) increased by 2.5% to EUR 4.3 billion. “In an effort to stimulate a make-up market that remains weak, notably in the US,” the Division launched an innovation plan, introducing of new products across its brand portfolio.
Sales of the dermatological beauty division (La Roche-Posay, Vichy, etc.) increased by 3.5% to EUR 2.1 billion, driven by La Roche-Posay. While business in North America remains challenging, sales of this division recorded double-digit growth in North Asia.
Finally, sales of professional products reached 1.28 billion euros (+2.7%).