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L'Oreal Shares Surge After Company Posts Higher Q3 Sales

By Publications Checkout
L'Oreal Shares Surge After Company Posts Higher Q3 Sales

L'Oreal's shares rose sharply on Wednesday after the cosmetics and fashion group reported higher third-quarter sales, with turnover driven by booming demand in Asia.

The group's shares were up 5.9% in early trading, one of the best performers in European markets. The stock has risen nearly 10% so far in 2018.

Late on Tuesday, L'Oreal posted revenue of €6.47 billion, up 6.2% from a year earlier and rising 7.5% on a like-for-like (LFL) basis, which strips out currency swings and the effect of acquisitions.

Strong Performance

"Outstanding Q3 LFL top-line growth was ahead of the elevated levels of H1 and consensus expectations," Bernstein analyst Andrew Wood said in a note.

"L'Oreal's stock has been lacklustre in recent weeks, giving up some year-to-date gains, as investors worried about slowing top-line momentum, but the strong Q3 should drive a good, positive stock reaction," he added.

A particularly strong performance in the luxury division, which houses Yves Saint Laurent make-up and perfumes and brands such as Clarisonic, also lifted L'Oreal's overall revenue.

Rivals more squarely focused on the luxury segment like U.S.-based Estee Lauder have also been performing well.

L'Oreal has been struggling, however, to counter the more sluggish growth in its consumer products division, with sales coming in a little below forecasts and matching the lacklustre 2.3% like-for-like growth of the second quarter.

Nevertheless, analysts gave a positive reaction with Investec upgrading its rating on L'Oreal to "buy" from "hold".

The Bettencourt Meyers family owns 33% of L'Oreal and Swiss company Nestle has a 23% stake.

© 2018 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition. 

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