L'Oreal Sales Beat Estimates on Accelerating Luxury Growth

Updated on
  • North American revenue increases 5%, besting rival Unilever
  • Yves Saint Laurent, Urban Decay and Kiehl's fuel performance

L’Oreal SA reported revenue that beat analysts’ estimates as strong demand for luxury cosmetics such as Urban Decay makeup and Yves Saint Laurent scents led to an acceleration in North America.

Fourth-quarter sales gained 4.2 percent on a like-for-like basis, the world’s largest cosmetics company said Thursday after markets closed. Analysts predicted a 3.7 percent increase. North American sales rose 5 percent, besting the 3.5 percent estimate and almost doubling the pace of growth in the first half of the year.

Demand for luxury cosmetics strengthened in all regions as market turbulence that held back growth in Asia over the summer subsided. Urban Decay, YSL and skincare brand Kiehl’s posted double-digit revenue growth in North America over the year, helping compensate for a slowdown in Brazil and a lackluster performance in Western Europe, where L’Oreal is struggling to win market share in its consumer-products division.

The better-than-expected North American growth contrasts with a 0.6 percent decline at rival Unilever and was one of “the main surprises,” said Jeff Stent, an analyst at Exane BNP Paribas. “We’d expect a modest positive reaction tomorrow.”

L’Oreal N. American sales

*Full-year operating income rose 13 percent to 4.39 billion euros
*2015 sales advanced 12 percent to 25.3 billion euros
*Like-for-like revenue increased 3.9 percent last year
*L’Oreal said it expects to grow faster than the global cosmetics market
*Shares fell 2.9 percent in Paris trading Thursday

(Updates with analyst comment in fourth paragraph.)
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