L’Oreal preliminary Q1 results show clear return to growth

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Europe

L’Oreal’s sales for the first quarter have made a strong comeback, growing 7.4 per cent on a like-for-like basis, as consumers return to the fold.

The company reported that sales grew to €4.72bn ($6.28bn), compared to sales of €4.37bn in the corresponding period last year, a figure that was up 7.6 per cent on a reported basis.

The first quarter sales figures beat most analysts’ estimates, with a poll of ten analysts conducted by news agency Reuters forecasting an average sales turnover for the period of €4.67bn.

An 'encouraging' quarter, although comparisons are weak

“The first quarter was very encouraging as it marks a clear return to growth, even though the figures must be seen in the context of a weak comparison base and continuing uncertainties in some markets,”​ said CEO Jean-Paul Agon.

Full quarterly results, including operating and net profits, are due to be released within the next two weeks, but are expected to have also increased significantly on the back of cost cutting measures and the increased sales.

Breaking down the results, the strongest performance came from the company’s luxury products division, which during the course of 2009 was hardest hit as consumers tightened their purse strings and turned away from expensive purchases.

Luxury sales lead the way for growth

Sales for the luxury division rose 10.3 per cent on a reported basis during the quarter to €1.01bn, up from €0.92bn in the corresponding quarter of 2009. On a like-for-like basis the increase was 11.8 per cent.

The results for the luxury division were driven by the Lancome facial skin care brands Génifique and Absolue Precious Cells, while the Hypñose Precious Cells mascara, being promoted by Julia Roberts, also made ‘an excellent start’.

The company’s largest division, consumer products, also enjoyed healthy reported sales growth of 7.7 per cent, to €2.36bn, up from €2.19bn in the corresponding period last year, a figure that represented growth of 6.9 per cent on a like-for-like basis.

Body Shop sales show least growth

Professional product sales grew 8.7 per cent on a reported basis, to €0.65bn, while active cosmetics grew by 4.4 per cent to €0.42bn. Body Shop sales rose very slightly to €164m.

On a regional basis, sales in reported terms grew by 2.8 per cent in Western Europe, 5.7 per cent in North America, 14.4 per cent in Asia Pacific, 13.8 per cent in Eastern Europe and 21.2 per cent in Latin America.

Although Agon described the results in Western Europe as being ‘more contrasting’, he stated that the overall group performance had given a boost to the company’s major strategic objectives for 2010.

Related topics: Business & Financial

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