L'Oreal Q3 sales top forecasts as China and emerging markets lift beauty demand

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L'Oreal Q3 sales beat forecasts

Highlights

L'Oreal Q3 sales rose 7.7% like-for-like to 11.56 billion euros, beating analyst expectations of 5.9% growth according to Visible Alpha.
The luxury division grew 7% vs. a 4.5% forecast, driven by fragrances and accelerating sales in China as the beauty market recovers there.
Europe sales increased nearly 9%, South Asia and Middle East revenues surged 19.5%, and L'Oreal shares are up 11% year-to-date.

Third-quarter growth beats market expectations

As reported by Reuters, L'Oreal says sales from July to September rise 7.7% on an adjusted like-for-like basis to 11.56 billion euros, ahead of analysts' consensus forecast for 5.9% growth in a Visible Alpha poll.

The maker of CeraVe moisturiser and Prada perfumes says demand for luxury fragrances, skincare and hair products supports the performance. Chief Executive Nicolas Hieronimus says in a statement that the global beauty market again proves resilient in a challenging context and that L'Oreal continues to significantly outpace it.

Beauty remains a relative bright spot in a weak consumer goods environment, with some analysts and executives pointing to the "lipstick effect", as consumers continue to spend on affordable luxuries during tougher periods. Growth is also supported by product innovation and expanding online sales channels.

L'Oreal steps up innovation after growth slows last year, particularly in skincare. New premium Kerastase shampoos and La Roche-Posay sunscreen and serums are among its fastest-growing lines as consumers seek more targeted beauty products.

China recovery and regional demand support outlook

L'Oreal's luxury division, which generates more than a third of group revenue, grows 7% on a like-for-like basis, well ahead of a 4.5% forecast. The division is supported by strong demand for fragrances including Prada Paradigme and by accelerating sales growth in China.

China's beauty market expands again after two years of contraction, as middle-class consumers shift spending from entry-level luxury goods toward prestige beauty products. That recovery adds to broader strength across emerging markets for the French group.

Sales in Europe, L'Oreal's largest market, rise nearly 9%, while revenue in South Asia and the Middle East jumps 19.5% on strong demand in Gulf countries and Vietnam. Shares in L'Oreal, France's most valuable listed company, are up 11% this year.

In our earlier article on Moody’s upgraded global growth outlook, we noted that stronger household demand and a steadier labor market were underpinning a more optimistic view of the global economy. We also highlighted that inflation and supply-chain disruptions remained key risks that could still weigh on growth momentum in some regions and sectors.

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