In an impressive start to the year, L'Oreal announced a 9.4% increase in sales for the first quarter, on a like-for-like basis, surpassing market expectations. This growth comes despite concerns over potential slowdowns in the United States and China, the two largest beauty markets.
The Paris-based beauty behemoth, home to popular brands such as Maybelline and Lancome, disclosed a revenue of 11.24 billion euros ($11.98 billion) for the quarter ending March.
This sales surge exceeded analyst predictions, which had anticipated a 6.1% increase, as per Jefferies. On a reported basis, sales rose by 8.3%.
L'Oreal's robust performance is a positive signal to the market, particularly following pessimistic remarks from U.S. retailer Ulta Beauty about an unexpected deceleration in the U.S. market earlier in the month. These comments had previously led to a roughly 4% drop in L'Oreal's stock value and exerted downward pressure on other U.S. cosmetics brands like e.l.f. Beauty, Coty, and Estee Lauder.
Despite these concerns, L'Oreal reported over 12% sales growth in both North America and Europe. The company highlighted that its mass market range and dermatological products helped balance out the luxury segment's softness.
Even with slowing sales in the U.S., L'Oreal's consumer products division, which generates more than a third of its revenue, saw an 11.1% increase on a like-for-like basis. The company attributed this growth to higher volumes and value, with significant demand in Europe and emerging markets.
The dermatological beauty segment, featuring brands like La Roche-Posay and CeraVe, experienced a remarkable 21.9% growth, continuing to benefit from medical endorsements.
Luxury division sales, which include YSL's Libre fragrances and recently acquired Aesop products, grew by 1.8%, defying expectations of a decline. This was bolstered by strong performance in Europe and North America, which compensated for a weaker showing in North Asia due to challenging comparisons in Travel Retail and slow growth in mainland China. Nevertheless, L'Oreal emphasized its significant outperformance in China with a 6.2% growth rate.
Despite a 6% decline in its shares this year, L'Oreal, Europe's sixth most valuable listed company with a market capitalization of about 220 billion euros ($234.26 billion), has fared better than its U.S. counterpart Estee Lauder, which saw a 5% decrease.
