L’OREAL 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 per cent on a like-for-like basis, L’Oreal said on Tuesday (Jul 30), less than the 6 per cent gain expected by analysts. Growth at the French company’s dermatological unit, which includes brands such as La Roche-Posay and CeraVe, came in especially far below estimates.
The beauty market declined in mainland China due to a tough comparison with a year earlier and weak consumer confidence, L’Oreal said. Sales in North Asia, the region that includes China, fell by 2.4 per cent 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’Oreal’s American depositary receipts fell as much as 2.8 per cent in New York trading. The company’s Paris-listed shares have declined 13 per cent this year to Tuesday’s close.
L’Oreal, 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 and Burberry Group are among the high-profile names whose performance has been hurt. BLOOMBERG
