L’Oréal said fourth-quarter sales rose 2.5 per cent like-for-like to €11.08 billion, missing analyst expectations of a 3.9 per cent increase, per the Visible Alpha consensus. This marks a slowdown in sales growth following a third-quarter organic revenue increase of 3.4 per cent. For the full year, organic group sales were up 5.1 per cent to €43.49 billion.
Dermatological beauty (including Cerave and La Roche-Posay) led company growth with sales up 5 per cent in the quarter. Professional products (Kerastase, Redken) were up 3.8 per cent, consumer products (L’Oréal Paris, Maybelline) were up 2.7 per cent, while L’Oréal Luxe (Kiehl’s, Yves Saint Laurent) was up 1 per cent. From a geographic standpoint, soft sales in North America (up 1.4 per cent, well below expectations of 5 per cent), did not offset the 3.6 per cent decrease in North Asia. Europe was up 5.2 per cent.
“The long-term outlook should not be called into question, but the most likely assumption is 3 per cent growth in the first half of 2025,” says Pierre Tegnér, consumer staples equity analyst at Oddo BHF.
“Excluding North Asia, where the Chinese ecosystem remained challenging, sales advanced in the high single digits,” L’Oréal CEO Nicolas Hieronimus said in a statement. The executive is “optimistic” about the global beauty market in 2025, and is “confident in [L’Oréal’s] ability to keep outperforming it and to achieve another year of growth in sales and profit”. “We expect growth to accelerate progressively, supported by our beauty stimulus plan, which will be driven by an exciting pipeline of launches and continued strong brand support.”
Sluggish sales in China and travel retail’s slow rebound have cast a shadow over big beauty. Estée Lauder Companies sales fell 6 per cent to $4 billion in its second quarter, which sent stocks down 16 per cent. The company also announced layoffs of up to 7,000 employees. LVMH’s perfumes and cosmetics division reported 2 per cent organic sales growth to €2.27 billion in the fourth quarter. Coty will publish its earnings on 10 February.
“After mixed read-across from peers so far this earnings season, sentiment had been nervous heading into results, and these fears have proven well-founded, as we have a weak set of numbers, illustrating that the wind has been well and truly knocked out of the industry darlings’ [L’Oréal and Estée Lauder’s] sails,” wrote Bernstein analysts, including Callum Elliott, in a note. “It is also the lowest quarterly performance since the height of the pandemic, and outside of the pandemic, you need to go back more than 10 years to the third quarter of 2014 for weaker growth.”
L’Oréal also announced some governance changes, starting with the fact that L’Oréal heiress Françoise Bettencourt Meyers has informed the board of directors that she would not request the renewal of her tenure as director. She has proposed that the family-owned holding company Téthys join the board of directors alongside her two sons, Jean-Victor and Nicolas Meyers. If the annual general meeting approves the appointment of Téthys as a director, Téthys would designate deputy CEO Alexandre Benais as its representative.
L’Oréal is to host its annual earnings conference at its HQ on Friday morning. “US weakness [is] likely to be of particular interest to investors as the sequential slowdown for L’Oréal bucks the recent trend of improvement seen by LVMH and Richemont,” Bernstein analysts added.
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