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L’Oréal Leaps In Paris As Sales Beat Estimates On Make-Up Growth

L’Oréal SA shares rose the most in almost seven months after revenue at the world’s largest cosmetics maker beat estimates on strong North American demand for NYX and other make-up brands.

The stock climbed as much as 5.3 per cent to €169, the steepest intraday gain since 25 September. It was trading up 4.6 per cent as of 9:03 am in Paris.

Like-for-like sales advanced 4.2 per cent in the quarter, compared with the 3.5 per cent gain estimated by analysts. Growth at the consumer unit, L’Oréal’s largest, was the strongest in almost three years at 3.9 per cent. North America helped compensate for slowing sales of luxury cosmetics in Hong Kong, where fewer Chinese shoppers are traveling, and weakness in Brazil, where demand surged last year before a tax increase.

"The biggest positive surprise was the performance of consumer," said Andrew Wood, an analyst at Sanford C. Bernstein. Though the active-cosmetics and professional-products units trailed estimates, "consumer is much more important."

L’Oréal reiterated a forecast for sales and profit growth in 2016, even "in an economic and monetary environment that remains volatile." The company said it’s confident of outperforming the cosmetics market’s expected expansion of about 3.5 per cent.

Full-year revenue will increase faster than in the first quarter, Chief Executive Officer Jean-Paul Agon said on a conference call. The operating margin will probably also widen, said Chief Financial Officer Christian Mulliez.

In a separate statement, L’Oréal said Asia chief Alexis Perakis-Valat will succeed  Marc Menesguen as head of the consumer division in September. Menesguen, who has worked for the company for three decades, will retire at the end of this year, Agon said.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazineclick here.

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