L'Oréal attributes European market for slump in sales

11-Nov-2014 - Last updated on 11-Nov-2014 at 11:09 GMT

According to cosmetic giant L'Oréal, the mass market hit an 'air pocket' in western Europe during the third quarter, hitting its' consumer products division, which accounts for almost half of group revenues.

Revenues for the global brand in the three months to the end of September reached €5.39bn, 2.3% higher on the previous year but below the 3.6% increase that analysts had forecast.

The slump represented by the consumer products division, was the only one of four primary distribution channels – (professional products, luxe, and active cosmetics) to record negative growth as it contracted 0.4% on a like-for-like basis compared with a year earlier.

Despite this, L'Oréal says it expects sales to 're-accelerate' in the last three months of this year, thanks in part to steady improvements in the US mass market and continuing growth in emerging markets.

Sales in North America were up 2.4% for the quarter to €1.33bn, a decline of 3.3% in reported terms, whereas sales in the Asia Pacific region were up 6.3% to €1.05bn, an increase of 0.4% in reported terms.

In the other new markets, Latin America posted quarterly growth up 7.6% to €466.1m, a fall of 7.8 in reported terms, whereas sales in Africa and the Middle East rose by the highest rate, up 14.0% to €141.3m, an increase of 7.9% in reported terms.

‘Contrasts’ show up in distribution channels

On the back of the global performance of the company, executives believe that it is still on track to reach its full year objectives, despite the fact that the business has been hampered by currency translations.

In fact, in a recent statement Jean-Paul Agon, chairman and chief executive officer reckoned 2014 should be another year of improved economic performance for the brand.

Agon pointed out that the strongest performance came from the luxe division where revenues for the quarter were up by 7.5% to €1.44bn on particularly strong performances in the new markets, most notably in China.

However, growth was slowest in the professional products division, where sales grew by 2.2% for the quarter to reach €769.9m, where the company conceded that growth had been weaker than expected in the Asia Pacific region.