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L’Oréal Q4 2023 Sales Fall Below Analysts’ Expectations

PARIS – L’Oréal’s organic sales in fourth-quarter 2023 fell below financial analysts’ expectations.

Reporting after the close of the Paris bourse Thursday, the maker of Lancôme, Kiehl’s and Garnier products said its sales for the three months ended Dec. 31 grew 2.8 percent at reported exchange rates to 10.61 billion euros. That represented a 6.9 percent organic rise.

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Consensus of analyst estimates had expected the group’s like-for-like growth to be 9.5 percent.

“The miss comes almost entirely from China,” wrote Bruno Monteyne, a Bernstein analyst in a note entitled “Disappointing end to the year.”

In the fourth quarter, L’Oréal’s sales in North Asia were down 6.2 percent organically, against a consensus of plus 0.4 percent.

“Travel retail is still a bigger drag than expected, but mainland China was possibly in decline as well,” wrote Monteyne. “The company states 5 percent growth for the mainland for full year, but looking at previous quarters that would suggest 0 percent to 2 percent growth in Q4. Until now, L’Oréal was always able to find some hot spot of growth around the world to offset weakness in another area.”

Another geographic market’s results to slip below forecasts was Europe, with organic sales growth of 11.6 percent, whereas North American sales beat consensus, with 9.4 percent gains.

Division-wise, L’Oréal’s top-line miss was led by Luxe and Consumer Products. L’Oréal Luxe’s organic growth was 0.4 percent, against a consensus of 3.8 percent.

“After recent reassuring results from LVMH’s perfume and cosmetics division (to which Luxe has been well-correlated…) and to some extent [the Estée Lauder Cos.], we think this will come as a negative surprise to the market,” wrote Molly Wylenzek, an equity analyst at Jefferies, in a note.

L’Oréal’s Consumer Products division’s organic sales of 7.7 percent were under the consensus of 11 percent. Beating expectations were the group’s Dermatological Beauty and Professional Products divisions, with like-for-like sales gains of 27.3 percent and 6.4 percent, respectively.

In 2023, L’Oréal’s overall sales reached 41.18 billion euros, up 7.6 percent in reported terms and 11 percent on an organic basis. A milestone was reached, with L’Oréal’s Luxe division becoming the global leader in luxury beauty, with sales of 14.92 billion euros last year, supplanting the Estée Lauder Cos.

Nicolas Hieronimus, chief executive officer of L’Oréal, underlined how the company for its third consecutive year registered double-digit like-for-like sales growth and outperformed the dynamic beauty market.

“In a challenging environment of geopolitical tensions, inflationary pressures and a stagnating beauty market in China, we delivered our best like-for-like growth in more than 20 years (excluding in 2021),” Hieronimus said in a statement, adding he is especially pleased with L’Oréal’s strong acceleration in emerging markets.

In 2023, Latin America and the South Asia Pacific, Middle East, North Africa, Sub-Saharan Africa (or SAPMENA-SSA) zone posted organic sales advances of 24.4 percent and 23.2 percent, respectively.

“As we head into 2024, we remain optimistic about the outlook for the beauty market and confident in our ability to keep outperforming it and to achieve another year of growth in sales and profits,” said Hieronimus.

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