By Dominique Patton
PARIS, April 23 (Reuters) – Shares in L’Oreal jumped more than 8%, on track for their best day in four years, after the French cosmetics group posted first-quarter sales growth of 6.7% on Wednesday, beating expectations with its fastest quarterly growth in two years.
The group said consumers in the U.S., China and Europe all bought more of its premium hair products and perfume in the quarter and it was optimistic about 2026 growth in both sales and profits, despite growing concerns about the impact of the war in the Middle East on consumer confidence.
“L’Oreal has returned to form,” said analysts at RBC, who had expected first-quarter growth of 5.6%.
The shares had risen almost 9% in early trading and were up 8.3% at 375 euros by 0841 GMT. They had been down about 6% year-to-date, with worries about the ripple effects of the Middle East conflict weighing heavily on the luxury sector.
L’Oreal, whose products span price points, outperformed luxury groups which said they had taken a hit from a downturn in shopping in the Middle East. It also outperformed peers like Nivea-maker Beiersdorf which this week posted a drop in sales.
Last month, U.S. cosmetics retailer Ulta Beauty forecast annual profit below analysts’ estimates as higher costs weighed on margins.
TARIFFS STILL A CONCERN
L’Oreal, which makes Kerastase shampoo, La Roche-Posay creams and YSL Libre perfume, said its growth was particularly high in emerging markets and first-quarter sales in China had improved, driven by demand for luxury products.
In Europe, its largest market, consumers were resilient and buying cosmetics to feel better in stressful times, CEO Nicolas Hieronimus told analysts.
Growth was “spread out across numerous segments, which means that it wasn’t just one business dragging up the rest,” said Michael Field, chief equity strategist at Morningstar.
CFO Christophe Babule told analysts the group will see a negative impact from U.S. tariffs on its gross margin in the first half, which it is trying to mitigate in addition to the potential hit from higher oil costs linked to the Iran war.
While the impact of tariffs was still of some concern, increased prices and volume growth would likely offset this, Field said.
Analysts at JPMorgan said they had raised their forecast for full-year sales growth to 4.8% from 4.1% earlier, despite an expected slowdown in the second quarter.
(Reporting by Dominique Patton; Editing by David Goodman, Clarence Fernandez, Elaine Hardcastle)
Comments