L'Oréal Sales Recovery Picks Up Pace, Helped By China
Lancome maker L'Oréal posted a further pickup in sales in the first quarter, helped by strong growth in China, and said there were early signs that make-up demand would make a comeback after the COVID-19 pandemic.
The French group had already begun to recover from the worst of the COVID-19 pandemic's hit to revenue, as retailers re-opened in much of Asia and shoppers turned increasingly to buying their face creams and hair dyes online.
L'Oreal said sales reached €7.6 billion ($9.1 billion) in the three months to March, up 10.2% on a like-for-like basis stripping out the effects of acquisitions and currency moves.
That beat the 8.7% consensus forecast cited by analysts at Jefferies, though the range of expectations varied widely.
Western Europe underperformed other regions, with non-essential shops and beauty chains still closed in countries such as France and Italy to tackle the pandemic.
But online shopping for beauty products was surging in the region, executives at the group said, racing ahead at a faster pace in the first quarter than in some already highly-connected markets like China.
L'Oreal's consumer products division, which also sells brands including Maybelline, also lagged other units, due to its high exposure to make-up, where demand is sluggish compared with other categories like skincare.
The company forecast cosmetics sales would bounce back once COVID-19 restrictions began to truly ease and people began to socialize more, citing examples such as Israel, which has steamed ahead with COVID-19 vaccinations.
"In March (in Israel) even though people were still wearing masks ... the appetite for beauty was confirmed," Nicolas Hieronimus, due to take over as CEO later in April, told analysts on a conference call. He said make-up sales there were not back to 2019 levels, but had risen more than 40%.
L'Oreal chairman and CEO Jean-Paul Agon, who will retain his job as chair, said in a statement the company was in "fighting spirit mode" and investing in new product launches, adding the group was confident it could grow sales and profits in 2021.