L’Oreal SA sales disappointed as the owner of Lancome suffered from a decline in shopping by Chinese travelers.
Sales at the cosmetics group rose 6.9 percent on a like-for-like basis in the fourth quarter of last year, the French company said on Thursday, trailing estimates. Revenue from North Asia dropped 6.2 percent, while analysts had expected it to be little changed.
“The key question here will be how long China remains soft,” Morgan Stanley analyst Sarah Simon said in a research note. She expects tough comparisons in the first half of the year and “a much better picture” in the second half.
Photo: AFP
The performance in North Asia, which includes China and South Korea, continued to suffer from a challenging travel retail market, which weighed in particular on its premium unit, L’Oreal Luxe. That division includes labels such as Lancome and the recently integrated Aesop, which L’Oreal bought last year.
“North Asia continued to be impacted by the reset in Travel Retail following the change in policy regarding ‘daigous,’” the company said, referring to the practice of Chinese tourists buying on behalf of others when traveling.
Despite the drag from Asia, L’Oreal’s resilience stands in contrast to its US rival Estee Lauder Cos, which earlier this week announced plans to cut as much as 5 percent of its workforce as it loses market share.
Photo: Reuters
L’Oreal’s dermatological beauty unit, which includes labels such as La Roche-Posay, grew by 27 percent and topped estimates. North America sales also beat expectations.
The company will continue to outperform the beauty market, L’Oreal chief executive officer Nicolas Hieronimus said in the statement.
Separately, Hermes International SCA’s sales surged at the end of last year as the Birkin bag maker weathered the slowdown in demand for luxury goods with its unique model driven by scarcity.
Fourth-quarter revenue climbed 17.5 percent at constant exchange rates, Hermes said in a statement yesterday.
The company also announced plans for an exceptional dividend of 10 euros a share.
Despite a cooling in demand for luxury products following the post-pandemic boom, Hermes’ brand still lures wealthy customers willing to splurge on its hard-to-get handbags and pricey silk scarves. All the main divisions of the Paris-based company grew by at least 10 percent.
In a call with reporters, Hermes executive chairman Axel Dumas said the company plans product price hikes of 8 percent to 9 percent on average this year.
Recurring operating income for the year rose to 5.65 billion euros (US$6.1 billion), topping analysts’ estimates.
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