L’Oréal SA sales jumped as the cosmetics maker saw strong demand across regions and business divisions, with signs of improvement in China after a difficult start of the year.
(Bloomberg) — L’Oréal SA sales jumped as the cosmetics maker saw strong demand across regions and business divisions, with signs of improvement in China after a difficult start of the year.
Sales in the first quarter gained 13% on a like-for-like basis, the owner of the Maybelline New York label said Wednesday. Analysts had expected a gain of 8.1%. Shares in Paris rose as much as 1.3% early Thursday.
Although growth in North Asia, which includes China, trailed market estimates, sales in the country have been improving since February, Chief Executive Officer Nicolas Hieronimus said in a call with analysts.
“We’ve absorbed our extra inventory and now we are back to a pretty dynamic growth,” he said, adding that the company managed to gain market share in China compared to rivals.
“The magnitude of the first quarter beat and the bullish outlook for China should be enough to sustain the stock’s upward momentum,” Rogerio Fujimori, analyst at Stifel wrote in a note.
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L’Oréal shares have risen by more than a quarter this year as the beauty company benefits from a global footprint and a wide product offering, which ranges from affordable Garnier shampoos to high-end Helena Rubinstein skin creams. Despite inflation creeping up and squeezing household budgets, the group was able to grow last year.
The company’s consumer products unit helped to lead growth, with like-for-like sales of nearly 15%. By the same measure, its dermatological beauty unit (formerly known as active cosmetics) which includes brands like La Roche-Posay and CeraVe surged almost 31%, nearly double analysts’ average estimate.
The reopening of the world’s second-largest economy has given a boost to global consumer brands, including luxury names. Last week, Hermès and LVMH, the owner of Christian Dior and Louis Vuitton, saw quarterly revenue jump, in part thanks to Chinese shoppers.
L’Oréal said earlier this month it’ll buy Aesop in a deal valued at $2.53 billion on an enterprise value basis. The Australian soap brand will be part of its luxury division once the deal closes later this year, joining brands such as Lancôme. Analysts have said Aesop has room to grow in China, where it currently has a small presence. L’Oreal is hoping travel retail and e-commerce will also complement strong sales in physical boutiques, Fujimori wrote in his note.
READ: L’Oréal to Buy Skincare Brand Aesop in $2.5 Billion Deal
L’Oréal’s performance this year has boosted the fortune of its biggest shareholder, Françoise Bettencourt Meyers, 69, who owns close to 35% of the company founded by her grandfather. The French heiress is the wealthiest woman on the Bloomberg Billionaires Index with a fortune estimated at about $92 billion. In her native country, her riches are surpassed by those of LVMH Moet Hennessy Louis Vuitton SE Chief Executive Officer Bernard Arnault, now the world’s wealthiest person.
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