L’Oréal disappoints the market: growth slows in the fourth quarter, drag from China

Shares of L’Oréal SA slid in Paris after quarterly results that failed to convince the market. In the fourth quarter, the French cosmetics group reported sales growth of 6% on a like-for-like basis, below analysts’ expectations of around 6.5%. The stock fell by as much as 6.5% in early trading, marking the largest intraday decline since last October.

Results were weighed down primarily by the Luxe division, which includes brands such as Lancôme and Yves Saint Laurent. The segment was affected by the persistent slowdown in travel retail in Asia, with growth well below estimates. Weakness in the region that includes China—once a key engine of the group’s expansion—proved more pronounced than expected.

According to Wassachon Udomsilpa of RBC Capital Markets, the lack of revenue acceleration does not help in a context already characterized by cautious comments from competitors and high expectations for results. L’Oréal’s earnings report follows underwhelming performances from Estée Lauder Cos. and Coty Inc., which highlighted cooling demand in the beauty sector.

Despite the slowdown, the French group continues to show greater resilience than its rivals thanks to a diversified portfolio, ranging from the mass-market brand Maybelline to premium products such as Aesop.

The dermatological division in particular supported results, with sales up 11.5%, driven by launches from CeraVe and strong demand for La Roche-Posay. The consumer products division, the largest by revenue, posted growth of 4.8%, in line with expectations.

Andrea Pelucchi