L’Oreal Rises Above China Slowdown as Luxury Cosmetics Surge
(Bloomberg) -- L’Oreal SA’s year-end sales growth surged past expectations on the strength of high-end perfumes and skin-care brands that defied the economic slowdown in China.
Fourth-quarter sales increased 7.7 percent on a comparable basis, the Paris-based maker of Garnier shampoo and Maybelline makeup said Thursday after the close of markets. That beat analysts’ average prediction of 6.5 percent.
L’Oreal’s unit that sells premium skin-care brands like Biotherm and the luxury division selling Lancome cosmetics each grew at double-digit rates, quelling concerns that a slowing Chinese economy will hit consumption of high-end beauty products. Sales in China contributed to the best performance in 40 quarters for the world’s biggest maker of beauty products, according analysts led by Richard Taylor at Morgan Stanley.
“The strong Chinese consumer continues to drive growth with no signs of a slowdown and L’Oreal is capturing its fair share,” the analysts said in a note to clients.
The shares were little changed in Paris.
L’Oreal’s online efforts are also driving growth, with e-commerce up 41 percent last year. The company sponsored popular beauty bloggers, posted makeup tutorials on Instagram and experimented with streaming live events on Alibaba Group Holding Ltd.’s Tmall.
At a financial meeting Friday, Chief Executive Officer Jean-Paul Agon said L’Oreal’s relationship with Nestle SA is “excellent” and there is “no change” for the moment. Activist investor Dan Loeb has been pressuring the Swiss food giant to sell its stake in the beauty company.
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