L’Oreal Sales Growth Misses Estimates Amid Industry Slowdown

L’Oreal SA, (OR) the world’s largest cosmetics maker, reported quarterly sales growth that missed estimates amid a slowing market, particularly in North America.

Revenue advanced 5.2 percent excluding acquisitions, disposals and currency shifts, Paris-based L’Oreal said today in a statement after markets closed. That compared with the prior quarter’s 5.5 percent advance and the 5.4 percent median estimate of 13 analysts surveyed by Bloomberg.

Global beauty-market growth is slowing slightly to about 3.5 percent to 4 percent, L’Oreal’s financial communications director Thierry Prevot said today on a call with reporters. Still, the maker of Giorgio Armani fragrances and Maybelline makeup expects to outperform the industry and remains confident of another year of sales and profit growth, he said.

Like-for-like sales growth was “a little light compared to expectations,” Eamonn Ferry, an analyst at Exane BNP Paribas, said by e-mail. Growth of 4.5 percent in North America trailed Ferry’s 6.5 percent estimate, while the Body Shop and L’Oreal’s dermatology and luxury units “disappointed most,” he said.

North American growth slowed from 6.3 percent in the first quarter and 7.9 percent in the same period of last year.

A 0.8 percent decline in like-for-like revenue at the Body Shop and the luxury division’s 5.5 percent revenue gain were the worst quarterly performances since the last three months of 2010, said Andrew Wood, an analyst at Sanford C. Bernstein & Co.

‘Slight Disappointment’

“We expect slight disappointment from the market,” especially given the strength of L’Oreal stock this year, Wood said in an e-mailed note. He rates L’Oreal shares underperform.

The stock declined 1.6 percent to 128.8 euros in Paris trading today, paring this year’s gain to 23 percent and giving the company a market value of 78 billion euros.

Total revenue for the quarter rose 4.2 percent to 5.81 billion euros ($7.6 billion), L’Oreal said. The average estimate of 11 analysts surveyed by Bloomberg was 5.77 billion euros.

“The trends of the group’s flagship brands are favorable and more than ever before, our major product initiatives are really making a difference,” L’Oreal Chairman and Chief Executive Officer Jean-Paul Agon said in the statement.

L’Oreal is scheduled to report first-half earnings Aug. 29.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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