L’Oreal Reports Slowest Growth Since Pandemic

By Dominique Patton
PARIS (Reuters) – French cosmetics group L’Oreal reported on Thursday its slowest quarterly growth since the pandemic’s height, missing expectations amid weak Chinese demand and slowing North American sales.

The company concluded a challenging year marked by a stagnant Chinese economy and U.S. inflation impacting skincare and makeup demand in major markets.

The fourth-quarter sales rose by 2.5%, down from 3.4% in the third quarter and marking the slowest growth since 2020. Sales for the last three months of the year totaled 11.08 billion euros ($11.49 billion), against predictions for a 4.4% rise. L’Oreal previously indicated that fourth-quarter growth would align with the prior quarter’s.

Analysts at Jefferies forecast a negative share response and cautious commentary regarding growth recovery visibility. Last year, L’Oreal lost mass market share in China to domestic brands like Proya, while facing increased competition for dermatologist-recommended products in developed markets.

In North America, sales grew by 1.4%, significantly down from 5.2% in the previous quarter and below analyst expectations. Meanwhile, North Asia saw a revenue decline of 3.6% after a 6.5% downturn previously.

The Luxe division saw a 1% growth, far short of the 5% forecast, primarily due to North Asian weaknesses.

China’s major online shopping event, Singles Day, significantly impacts quarterly sales but had low expectations this year. Analysts suggested heavy discounting might have led to over-purchasing and returns, though L’Oreal did not comment on this.

The broader weakness in China has affected various luxury brands. LVMH reported lower-than-anticipated perfume sales, and companies like Pernod Ricard also noted bleak consumer demand insights, heightening a gloomy economic outlook through 2025 amidst global trade tensions.

Despite a reported low-single-digit decline in mainland China sales for 2024, L’Oreal indicated a global growth performance of 5.1% for the year. In a statement, L’Oreal expressed confidence in the global beauty market outlook and its ability to sustain growth in sales and profit.

($1 = 0.9641 euros)
(This story has been corrected to say revenues in North Asia were down by 3.6%, not 3.4%, in paragraph 8)