French cosmetics company L'Oreal reported fourth quarter sales growth that fell short of market expectations, reflecting a disappointing performance in Asia.
Sales totalled €10.6 billion ($11.4 billion), shy of expectations for €10.9 billion, according to consensus estimates cited by Barclays
L'Oreal's travel retail business suffered from tighter control by the Chinese government of resellers known as 'daigou'. The resellers purchase inventory at lower prices in other markets and resell them at a discount in the mainland.
A 'Rare Headline Miss'
They added that L'Oreal's top-line sales performance represented a 'rare headline miss'.
Analysts at Deutsche Bank said L'Oreal's performance in North Asia was "well below expectations."
'We are of the view that headwinds in China are structural not just cyclical,' they said in a note.
L'Oreal nevertheless outperformed its main rival Estée Lauder. Sales at Estée Lauder declined 8% overall in the same quarter.
The company also said on Friday it had signed a licensing agreement with high end fashion label Miu Miu for beauty products.
L'Oreal expects to launch the first fragrances in 2025 under the agreement, which encompasses the creation, development, and distribution of beauty products.
Like-for-like sales for its financial year 2023 increased 11.0%, to €41.18 billion, compared with the previous year, driven by the good performance of its consumer products and dermatological beauty divisions.
The consumer products unit saw the highest growth in more than 30 years, registering an increase of 12.6% on a like-for-like basis and 8.2% on a reported basis.
Nicolas Hieronimus, CEO of L'Oréal, commented, “2023 was a very successful year for the group. I am immensely grateful to our teams. Their creativity, entrepreneurship and passion enabled us to report a third consecutive year of double-digit like-for-like growth, once again outperforming a dynamic beauty market [...].
“As we head into 2024, we remain optimistic about the outlook for the beauty market, and confident in our ability to keep outperforming it and to achieve another year of growth in sales and profits.”
News by Reuters, additional reporting by ESM.