L’Oréal first quarter results: sales up 9.4% on strong mass market demand

PARIS – L’Oréal reported Thursday that first-quarter sales rose 9.4% year-over-year, a figure that beat expectations and allayed concerns about a slowdown in the company’s two biggest beauty markets, the United States and China.

The French cosmetics giant, which owns the Maybelline and Lancome brands, reported sales of 11.24 billion euros ($11.98 billion) in the first three months to the end of March.

Sales growth exceeded the consensus of a 6.1% increase cited by analysts at Jefferies. Sales reportedly increased 8.3%.

The performance of the world’s largest beauty company will reassure markets after U.S. retailer Ulta Beauty made pessimistic comments earlier this month about a faster-than-expected U.S. economic slowdown.

The comments sent L’Oréal shares down about 4% and also put pressure on U.S. makeup brands Beauty, Coty and Estee Lauder.

L’Oréal said sales rose more than 12% in both North America and Europe as its mass-market range and dermatology products made up for weakness in the luxury segment. L’Oréal said its consumer goods segment, which accounts for more than a third of its sales, grew 11.1% year-on-year despite concerns about slowing sales in its key market, the United States. The company benefited from increased production as well as the value of units due to high demand in Europe and emerging markets.

The small but fast-growing aesthetic dermatology division, which sells La Roche-Posay and CeraVe skincare, grew 21.9% as it continues to benefit from medical recommendations.

Sales at the luxury segment, which sells fragrances such as YSL’s Libre and Aesop products acquired last year, rose 1.8%, beating expectations for a decline, as strong growth in Europe and North America helped offset softness in North Asia.

North Asia suffered from an unfavorable comparative base in the travel retail sector and sluggish market growth in mainland China, but was significantly outperformed by L’Oréal, which recorded growth of 6.2% in China, the company added.

Shares in L’Oréal, Europe’s sixth-largest listed company with a market capitalization of about 220 billion euros ($234.26 billion), have fallen 6% so far this year, while shares in U.S. peer Estee Lauder have fallen 5%.