L’OREAL’s fourth-quarter sales fell short of analysts’ estimates after demand in the US failed to make up for a continued downturn in China.
Sales overall rose 2.5 per cent on a comparable basis in the period, the cosmetics company said. Analysts had expected a 3.8 per cent gain. Revenue in North America only grew 1.4 per cent, while the region including China continued to experience a drop.
“We expect the shares to react negatively,” when the market opens in Paris on Friday (Feb 7), Molly Wylenzek, an analyst at Jefferies, wrote in a note. L’Oreal’s American Depository Receipts slid as much as 2.4 per cent in mid-day trading in New York.
L’Oreal and the wider beauty industry have been suffering from a steep slowdown in China where consumer confidence has been hurt by a property crisis as well as youth unemployment.
That said, L’Oreal’s results were more resilient than those of Estee Lauder Cos, which earlier this week announced plans to cut up to 7,000 jobs after predicting that sales in the current quarter will slide by up to 12 per cent due to continued underperformance in its duty-free business in Asia.
The industry now has to contend with the threat of potential US tariffs under President Donald Trump.
L’Oreal’s operating profit in 2024, meanwhile, rose to 8.69 billion euros (S$12.2 billion), slightly higher than analysts’ estimate of 8.65 billion euros.
Separately, the company said Francoise Bettencourt Meyers, 71, whose family has a controlling stake in L’Oreal, has decided to not seek a renewal of her board seat when it expires in April. She will be replaced by Alexandre Benais, who heads her family’s investment vehicle Tethys Invest, after a vote at the company’s annual general meeting.
The family controls L’Oreal via its 35 per cent stake, which gives it a fortune estimated at about US$76 billion in the Bloomberg Billionaires Index. BLOOMBERG
