L’Oreal SA sales climbed as the cosmetics giant benefited from higher demand for its luxury products, weathering COVID-19 restrictions in China.
Sales rose almost 14 percent on a like-for-like basis in the first quarter of this year, the French company said late on Tuesday, beating analyst estimates.
Three of the four main divisions grew by double-digit percentages.
Photo: Reuters
The luxury unit, which includes skincare brands like Helena Rubinstein and Yves Saint Laurent perfume, grew by almost 18 percent. Total sales at the premium unit surpassed the mass-market consumer products business for the first time last year. The latter unit grew 6.9 percent during the quarter.
L’Oreal experienced supply issues that would not be fully solved by the second quarter, chief executive officer Nicolas Hieronimus told analysts in a call.
He forecast that the beauty market would grow 4 and 5 percent this year, with L’Oreal outperforming this growth.
L’Oreal would be able to fully offset the input cost increases of its products, which would affect its gross margin in the first half, chief financial officer Christophe Babule said during the call.
That is despite measures to increase product prices, especially for new launches, as well as a reduction of advertisement and promotional spending as a percentage of total sales, he said.
L’Oreal in China had double-digit percentage growth during the first quarter, outperforming the market in the country thanks to marketing campaigns for the Lunar New Year, Valentine’s Day and Women’s Day, the statement said.
Although current lockdowns are affecting demand, Babule said he is confident that Chinese consumers’ appetite for cosmetics can recover quickly once virus restrictions ease, as happened two years ago.
Hieronimus said the group is still selling essential products in Russia.
“We’re taking all the appropriate measures to offset any reputational risks” related to the company’s presence there, he added. “Should the situation warrant it, we’ll make adjustments.”
Last month, L’Oreal announced that it was temporarily shutting stores as well as its e-commerce site in Russia, even though its plant near Moscow remained open for business. Russia represents about 1.5 percent of total sales for L’Oreal.
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