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L’Oréal announces strong first quarter sales, thanks to premium brands

By Lucy Whitehouse + , 19-Apr-2017

L’Oréal announces strong first quarter sales, thanks to premium brands

In results that accord with recent industry research, L’Oréal’s start of the year has been bolstered by a strong performance from its luxury brands, while its mass-market products were slower.

Market research firm Euromonitor International has launched its most recent industry data, revealing that premium has outperformed the mass segment for the second consecutive year, growing at nearly 6%.

In line with this, L’Oréal’s Q1 results show that its higher end brands, such as Kiehl’s and Urban Decay, have been instrumental in delivering its 4.2% sales growth in the first quarter of this year (indeed, both these brands recorded double-digit growth, the firm states).

Results: an overview

In terms of the overall Q1 results, L’Oréal has described it as a ‘good first quarter’, with sales at EUR 7.04 billion, representing a 7.5% increase based on reported figures and 4.2% like-for-like.

Performance levels are consequently very differentiated across the Divisions, with outstanding growth for L’Oréal Luxe, a satisfactory start for Active Cosmetics, moderate growth for Consumer Products despite market share gains, and a slight drop for Professional Products,” noted Jean-Paul Agon, Chairman and Chief Executive Officer of L'Oréal.

The company head explained that regionally, Brazil and the Middle East are presenting challenges due to their economic climates, but otherwise, performance is generally strong.

In Western Europe, despite a ‘disappointing’ market in France, sales are continuing to hold up well, according to Agon. This is particularly thanks to ‘outstanding growth rates’ in the UK, Germany and Spain.

Digital, and active cosmetics

Two other areas the company highlighted in its Q1 report were its continuing acceleration in digital, both in terms of marketing ecommerce. This area of the business posted 27% growth and accounted for 6.8% of sales during the quarter.

On active cosmetics, Agon explained that the company is now moving into the neighbouring segment of dermocosmetics: “The acquisition of CeraVe complements the Active Cosmetics brand portfolio in the strongly expanding segment of accessible dermocosmetics, and will amplify this Division’s growth potential.”

Another point of focus in the report was The Body Shop, the ethical beauty brand that L’Oréal is hoping to sell: its like-for-like sales were up 2.3%.

Last week a handful of private equity firms submitted initial bids for the struggling retailer. In its results on Tuesday L’Oréal said it continues to explore strategic options regarding the ownership of The Body Shop, and no decision has been taken so far,reports the FT.

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