L’Oreal shares fall after Asian sales disappoint

By Mimosa Spencer

PARIS (Reuters) – Shares in L’Oréal fell 7.5% in early trade on Friday after the French cosmetics company reported fourth-quarter sales growth that fell short of market expectations, following disappointing performance in Asia.

L’Oreal reported a 6.9% increase in fourth-quarter sales after the market closed Thursday, slower growth than in the previous quarter. Revenue totaled 10.6 billion euros ($11.4 billion), below expectations of 10.9 billion euros, according to consensus estimates cited by Barclays

L’Oréal’s travel retail business suffered from tighter control by the Chinese government on resellers known as “daigou”. The resellers buy inventory at lower prices in other markets and sell it at a discount on the mainland.

Analysts at Barclays said they had expected the resolution of Asia’s travel retail sector problems to take longer than the market expected. They added that L’Oréal’s sales performance represented a “rare headline miss”.

Deutsche Bank analysts said L’Oréal’s performance in North Asia was “well below expectations”.

“We believe the headwinds in China are structural and not just cyclical,” they said in a note.

L’Oreal nevertheless outperformed its main rival Estee Lauder. Sales at Estee Lauder fell by a total of 8% in the same quarter.

The company also said Friday that it had signed a licensing agreement with high-end fashion label Miu Miu for beauty products.

L’Oréal expects to launch the first fragrances in 2025 under the agreement, which includes the creation, development and distribution of beauty products.

(Additional reporting by Piotr Lipinski; Editing by David Evans, Jason Neely, Matt Scuffham and Barbara Lewis)

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