L’Oreal Shares Decline as Sales Growth Disappoints

L’Oreal SA, (OR) the world’s largest cosmetics maker, fell in Paris trading after second-quarter sales growth missed estimates amid a slowing market.

The shares slid as much as 3.3 percent and were down 3.2 percent at 124.7 euros as of 9:22 a.m., the steepest drop in France’s benchmark CAC 40 Index. (CAC)

Sales rose 5.2 percent excluding acquisitions, disposals and currency shifts, Paris-based L’Oreal said yesterday 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. A slowdown in North American revenue growth to 4.5 percent from 6.3 percent in the previous quarter was the main concern of analysts.

The deceleration in North America was “underwhelming” and a negative “surprise given the stronger economic consumer backdrop,” Alex Howson, an analyst at Jefferies International Ltd., said by phone. “There is clearly a bit less spend on the category and competition and promotion has been a bit harder.”

Global beauty-market growth is slowing slightly to about 3.5 percent to 4 percent, L’Oreal’s financial communications director Thierry Prevot said yesterday 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.

Photographer: Goh Seng Chong/Bloomberg

A shop assistant tends to a customer at a Body Shop store, owned by L'Oreal SA, in the Sunway Pyramid Shopping Mall in Petaling Jaya, Malaysia. Close

A shop assistant tends to a customer at a Body Shop store, owned by L'Oreal SA, in the... Read More

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Photographer: Goh Seng Chong/Bloomberg

A shop assistant tends to a customer at a Body Shop store, owned by L'Oreal SA, in the Sunway Pyramid Shopping Mall in Petaling Jaya, Malaysia.

The Body Shop and L’Oreal’s dermatology and luxury units “disappointed most relative to our expectations,” Eamonn Ferry, an analyst at Exane BNP Paribas, said in an e-mail.

Body Shop

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

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

Photographer: Dhiraj Singh/Bloomberg

L'Oreal SA Color Protecting conditioner is arranged for a photograph at the company's first research and innovation center in Mumbai. Close

L'Oreal SA Color Protecting conditioner is arranged for a photograph at the company's... Read More

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Photographer: Dhiraj Singh/Bloomberg

L'Oreal SA Color Protecting conditioner is arranged for a photograph at the company's first research and innovation center in Mumbai.

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