By Dominique Patton
PARIS (Reuters) – L’Oreal reported a 3.5% rise in like-for-like first-quarter sales on Thursday, beating expectations for slower growth, as strong demand for its creams and perfume in Europe helped counter challenging conditions in the United States.
The French group has outperformed the global cosmetics market in recent years with products that span its mass-market Maybelline makeup to high-end Valentino perfume and doctor-recommended CeraVe lotions.
But after weathering a protracted slowdown in number two beauty market China in recent years, it is now facing weakening consumption in the U.S. too, the world’s largest for cosmetics, and one it had targetted for growth this year.
“The market did not exactly start as we were hoping,” CEO Nicolas Hieronimus told analysts on a call, though adding it was too early to adjust his forecast of 4 to 4.5% global market growth.
L’Oreal’s U.S.-listed shares gained 6% in New York trading, while shares in U.S. rival Estee Lauder were up 2.9%.
L’Oreal’s North America sales fell 3.8% in the quarter, compared with growth of 1.4% in the prior three months, dragged down by sluggish makeup demand.
All other regions grew, with Europe, accounting for a third of revenues, the largest contributor to sales that reached 11.7 billion euros ($13.30 billion) for the three months to the end of March.
Growth exceeded a Visible Alpha consensus of 1.3% cited by analysts at Jefferies, though it also included a 100 million euro benefit from phasing of an IT overhaul, the company said.
With growing unease over escalating trade tensions, U.S. consumer sentiment deteriorated sharply in April, which typically hurts spending in any category, said Hieronimus.
Luxury group LVMH said on Monday its beauty retailer Sephora had also seen slower growth in the first quarter in the U.S., hurt by cheaper offers on Amazon.
L’Oreal, which imports 30% of its product in the U.S. from Europe and elsewhere, will also need to raise prices to mitigate the impact of President Donald Trump’s tariffs, though the company has built up some stocks, delaying any impact until the second half, said the CEO.
He also flagged “slightly better than expected” performance in China, which was “flattish” compared with negative at the end of last year.
($1 = 0.8795 euros)
(Reporting by Dominique Patton. Additional reporting by Chuck Mikolajczak; Editing by Kirsten Donovan and Chizu Nomiyama)
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