L’Oreal Q3 performance sees overall stagnated growth


- Last updated on GMT

Related tags North america United states dollar

L'Oreal's overall revenue fell and sales growth was sluggish
L’Oreal reported a weak third quarter for 2013 as sales in some regions were affected by market slowdowns and higher-than-expected inventory reductions in distribution.

Overall, revenues were down to €5.48bn, from €5.52bn during the same quarter last year. Like-for-like sales growth was also significantly reduced.

Chairman and CEO Jean-Paul Agon commented: “In North America, consumer product division sales were affected by market slowdown and inventory reductions in distribution that exceeded our expectations.”

However, he gave the results a positive spin by highlighting the fact that the company continued to post solid growth in Western Europe and Asian territories and that demand for products was still strong.

Sluggish growth in many quarters

The company's 0.5% negative growth in reported cosmetics sales contrasts unfavorably with its strong performance in Q3 last year.

Sales in North America performed the worst of any region, with a sluggish like-for-like increase of 0.6% for the third quarter.

These results contrast with L’Oreal’s health 7.1% growth in the same quarter of 2012, which was attributed to the company consolidating its already solid position in that market.

According to Bloomberg, the company’s shares dipped by as much as 2.6% in the wake of the announcement.

The impact of currency fluctuations

Sales were significantly impacted by currency fluctuations, which had a “negative impact of 3.1% at September 30, 2013 and -6.0% in the 3rd​ quarter.”

Overall, the effect of exchange rate fluctuations are predicted to cause a -3.8% overall reduction for 2013.

Agon commented: “The economic context remains subject to some uncertainties about the market trend, and to the negative impact of currencies.”

"But our growth prospects, supported by the innovations and the globalisation of our major brands, combined with a strategy of targeted and complementary acquisitions, enable us to look to the future with confidence."

Body shop and dermatology flatline

Its' Body Shop and dermatology divisions were particularly weak performers, posting losses in reported sales and flatlining in like-for-like growth.

L’Oreal’s active cosmetics and L’Oreal Luxe divisions posted relatively good results, achieving sales growth compared to the same quarter last year in contrast to the professional and consumer products divisions.

However, these results do not compare to the company's strong growth in Q3 2012.

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