PARIS (Reuters) – L’Oréal reported on Tuesday a 3.4% increase in its sales in the third quarter, a significantly smaller increase than expected, while the period was marked by the deterioration of the sales figure. business in China of the French cosmetics giant.

Over the July-September period, sales of L’Oréal, owner among others of the Maybelline and Lancôme brands, amounted to 10.28 billion euros, representing organic growth of 3.4%.

This amount is much lower than expected: a Visible Alpha consensus cited by Jefferies came out at 6%.

“The last time L’Oréal reported quarterly organic sales growth lower than this was in Q3 2020, during the dark days of COVID,” RBC analysts said in a note.

According to analysts at Barclays, the scope and importance of this failure will likely be viewed negatively by investors. “Although investors were nervous heading into the results, they still came in weaker than expected,” they wrote.

In the press release accompanying its quarterly results, L’Oréal highlighted the evolution of its turnover over the first nine months of the year, describing it as “solid growth of 6% despite the turbulence”.

L’Oréal shares have fallen 20% since last June, causing around 50 billion euros of its market capitalization to evaporate, in a context of investor concern about low consumption in China.

In North Asia, a region dominated by the Chinese market and representing around a quarter of L’Oréal’s sales, the group’s turnover suffered a fall of 6.5% in the third quarter on a comparable basis, compared to a decline of 2.4% in the previous quarter.

“The turbulence” in the region in the third quarter was “worse than expected,” L’Oréal Chief Executive Nicolas Hieronimus said in a conference call with analysts.

“The situation in the Chinese ecosystem is still more difficult, but we believe in the future of this market and hope that the government’s stimulus will help improve consumer confidence,” he said in the group’s statement. .

OPTIMISM FOR 2025

According to statistics from Beijing published on Friday, China experienced its slowest growth in the third quarter since the start of 2023.

The world’s largest luxury group, LVMH, said last week that consumer morale in the country was at an all-time low.

In addition to LVMH, the Franco-Italian manufacturer of Ray-Ban, EssilorLuxottica, and the Italian brand Salvatore Ferragamo attributed their weaker performance in the third quarter to the general slowdown in consumption in China.

L’Oréal has seen low demand for its sunscreen and dermatological products. The dermatological products division, which enjoyed the fastest growth, saw sales growth slow to 0.8%, compared to 10.8% in the second quarter.

“We need to bring in new products,” Nicolas Hieronimus told analysts on Tuesday, noting that the division’s slowdown had mainly been felt in the United States, where few innovations have been launched recently.

In North America, however, L’Oréal’s overall sales increased by 5.2%, an acceleration compared to the previous quarter, fueled by demand for perfumes and hair products.

In Europe, L’Oréal’s main market with around a third of sales, growth slowed in the third quarter, with a 5.6% increase in turnover compared to 9.7% in the previous quarter.

The group’s financial director, Christophe Babule, declared during the conference call that the exceptional contribution from large companies envisaged in the 2025 finance bill in France could represent around “250 million euros of additional tax” for L’Oreal.

Nicolas Hieronimus, for his part, said he expected “the global beauty market to grow at a pre-COVID level in 2025”, estimating it between 4 and 5%.

However, in a note published today, Jefferies anticipates a “negative reaction from the stock” and “further downward revisions to the stubbornly high forecasts for the 2025 financial year on a comparable basis”, citing “the nervousness around the sustainability of the sector’s growth and China’s future.

(Written by Florence Loève and Dominique Patton, edited by Jean Terzian)

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