- North Asia region, which includes China, falls by 2.4%
- Dermatological, consumer units fall short of estimates
L’Oréal SA reported sluggish sales growth in the second quarter as the world’s biggest maker of beauty products suffered from weakness in China.
Sales rose 5.3% on a like-for-like basis, L’Oréal SA said Tuesday, less than the 6% gain expected by analysts.
Shares of L’Oreal rose 2.5% in early tradingWednesday, helped in part by a solid peformance in Europe. The stock is down about 6% in the past 12 months.
The beauty market declined in mainland China due to a tough comparison with a year earlier and weak consumer confidence, L’Oréal said. Sales in North Asia, the region that includes China, fell by 2.4% in the three months ended in June, worse than estimates. That marks the fourth straight quarter of falling sales in the region, which accounts for about a quarter of L’Oreal’s revenue.
L’Oréal, which greatly expanded its Chinese business over the past two decades, had warned last month that the beauty market overall would grow less than it had expected earlier this year.
European companies across a range of sectors are taking a hit from China’s slowdown, with makers of consumer goods especially affected. LVMH, Hugo Boss AG and Burberry Group Plc are among the high-profile names whose performance has been hurt.
L’Oréal’s performance in Europe was strong, however, and “defied gravity” rising almost 10% like-for-like, according to Jefferies analyst Molly Wylenzek. North American sales also came close to expectations, she said, but added that lofty forecasts for the rest of the year could could come under pressure as market growth slows.
Written by: Angelina Rascouet @Bloomberg
The post “L’Oréal Sales Growth Sluggish as China Weakness Persists” first appeared on Bloomberg
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