L'Oreal shares fall as sales edge up on North America, China recovery

L'Oreal SA shares sank on Wednesday after it reported slightly higher sales in the third quarter and said it was boosted by an ongoing recovery in North America and mainland China.

The Paris-based beauty firm said sales increased 0.5% to EUR10.33 billion in the three months to the end of September from EUR10.28 billion a year ago. The firm said sales improved 4.2% on a like-for-like basis.

In the year-to-date, sales increased 1.2% to EUR32.81 billion from EUR32.41 billion and advanced 3.4% on a like-for-like basis.

Shares in L'Oreal were down 6.1% at EUR373.70 in Paris on Wednesday morning.

L'Oreal reported growth across all divisions and said momentum accelerated "across the board" between the first six and nine months.

Reported sales in Professional Products were up 6.1% to EUR1.23 billion in the quarter, Consumer Products climbed 0.4% to EUR3.76 billion and Dermatological Beauty gained 1.1% to EUR1.62 billion.

However, sales in the Luxe arm fell 1.5% to EUR3.72 billion, but were 2.5% higher on a like-for-like basis.

The company said there was growth in all regions, and said it was boosted by a continuing recovery in North America and mainland China.

Europe sales gained 4.6% in the third quarter to EUR3.57 billion, while sales in the South Asia Pacific, Middle East, North Africa and Sub-Saharan Africa were 5.7% higher at EUR1.01 billion.

North America sales fell 4.3% to EUR2.97 billion but were 1.4% higher on a like-for-like basis. North Asia sales dropped 0.1% to EUR1.95 billion but like-for-like sales grew 4.7%.

Sales in Latin America dropped 3.0% to EUR825.0 million in the quarter, but gained 4.4% on a like-for-like basis.

"As anticipated, our like-for-like growth continued to sequentially accelerate... Progress was broad-based. All regions contributed: the recovery in our two largest markets – the US and mainland China – continued," said Chief Executive Officer Nicolas Hieronimus.

"Growth accelerated across all divisions, as the weight of new launches further increased in the third quarter fuelled by our Beauty Stimulus Plan. The global beauty market remains dynamic with a progressive improvement in luxury. Our strength online allows us to outperform what is today the most dynamic channel."

Looking ahead, Hieronimus said: "As we head into the last quarter of the year, I am confident that we will continue to outperform the global beauty market and to achieve another year of growth in sales and an increase in our profitability."