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L'Oreal's sales for the last quarter came in lower than expected, mainly due to slowing demand in China, where consumer confidence is still shaky. Overall, sales were up 3.4% to EUR10.3 billion, slightly below expectations.
North Asia, including China, saw sales drop by 6.5%, marking the fifth quarter in a row of declines. Analysts had been expecting growth, so this miss stood out. Despite the Chinese government introducing stimulus measures, spending on beauty products like makeup and skincare has remained subdued. Hainan, a popular duty-free spot, has struggled as well.
L'Oreal shares dropped just over 3% on the news. There are also concerns about the underperformance of the dermatological beauty division, which CEO Nicolas Hieronimus blamed on bad weather affecting suncare sales and fewer product launches.
Hieronimus is hopeful that government action will boost demand, but acknowledged the need to win back younger consumers, especially Gen Z, through innovation. The global beauty market is expected to grow by 4-5% next year and L'Oreal should enjoy a chunk of it.
