L’Oréal reported a modest rise in third-quarter sales on Tuesday, October 21, with growth tempered by unfavorable currency effects.
Sales rose 0.5 percent to 10.3 billion euros (US$12 billion), the company said in a press release. On a like-for-like basis, excluding currency and scope effects, sales were up 4.2%. That was slightly less than the 10.4 billion euros forecast by analysts surveyed by Bloomberg.
Sales by L’Oreal’s luxury division (Lancôme, Yves Saint Laurent, Giorgio Armani), which will integrate the brands currently being acquired from Kering, saw a 1.5 percent drop to 3.7 billion euros in the third quarter (but increased by 2.5% on a like-for-like basis).
UK-based skincare brand Medik8, in which L’Oréal took a majority stake and that joined the division in September, “maintained strong double-digit growth,” according to the press release.
Sales of professional products (Kérastase, Redken…), rose 6.1% to 1.23 billion euros (+9.3% like-for-like).
Revenue from the Consumer Products division, featuring Garnier, Maybelline, and L’Oréal Paris, grew 0.4% to 3.76 billion euros in the third quarter (+3.8% like-for-like).
Sales of dermatological beauty products, such as La Roche-Posay, CeraVe, and Vichy, reached 1.6 billion euros, up 1.1%, driven by e-commerce and personalized services for hair salons.
“Progress was broad-based, all regions contributed,” said Nicolas Hieronimus, CEO of L’Oréal. Sales in Europe increased by 4.6% to 3.6 billion euros.
“The recovery in our two largest markets – the US and mainland China – continued,” according to the executive. North American revenue fell 4.3% to 2.97 billion euros, though it increased 1.4% at constant exchange rates.
Similarly, in North Asia, sales fell by 0.1% to 1.95 billion euros but increased by 4.7% on like-for-like basis (constant scope and exchange rates).
Sales for the first nine months of the year increased 1.2% to 32.8 billion euros (up 3.4% on a like-for-like basis).
Creed, Gucci, Armani
The results were released less than two days after L’Oréal announced the 4 billion euros acquisition of the beauty division of luxury group Kering. The strategic investment — the largest in the company’s history — will strengthen L’Oréal’s position as the world’s leading perfume maker.
The deal provides for L’Oréal’s acquisition of the high-end fragrance brand Creed, alongside 50-year licensing arrangements for beauty and fragrance lines, including Balenciaga, Bottega Veneta and Gucci.
“The acquisition of Creed enables us to move further into high-end niche fragrances priced above 200 euros,” Chief Executive Nicolas Hieronimus told Le Figaro. He added that Creed’s revenue could quickly triple to 1 billion euros.
“For Gucci, the goal is to elevate the beauty business to the same level as fashion — as we’ve done with Yves Saint Laurent — which is far from being the case today,” said Nicolas Hieronimus.
HSBC estimates Gucci’s beauty sales under Coty at roughly 600 million dollars (500 million euros).
Hieronimus also said it is interested in taking a stake in Italian company Armani — as its late founder suggested. "The acquisition of Kering’s beauty activities changes nothing in terms of our intention to be part of Armani," he explained.
