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L’Oréal Sees Some Signs of a Slowdown

 

L’Oréal SA expects slower growth for the overall beauty market this year, according to its CEO, as weakness in China weighs on sales after years of rapid gains.

 

Nicolas Hieronimus recently told investors at a JPMorgan event in Paris that he now sees the global beauty market growing between 4.5% and 5% this year from a previous forecast of 5% earlier this year, a L’Oreal spokesperson told Bloomberg News.

In his analysis, Hieronimus blamed the downward revision on a flat market in China. That country had long been a growth engine forL’Oréal, with consumers snapping up its high-end cosmetics offerings.

Shares of L’Oréal closed 3.4% lower on Thursday and fell as much as 3.7% on Friday morning. They’ve lost 8.6% so far this year.

Rivals also slipped, with Estee Lauder Cos. down 2.1% in New York last week.

L’Oréal in April reported a 9.4% gain in like-for-like sales during the first three months of the year, which had allayed some concerns about the state of the beauty business. The company’s next quarterly update is set for July 30.

“L’Oréal continues to maintain an unassailable leadership position in the skincare sector, particularly in the Chinese market, due to its high research-and-development barriers,” said Jie Zhang, analyst at Alphavalue. “However, we have concerns that the mass-market makeup segment may be losing market share to local brands”.

Despite the recent decline in share prices, the increase in sales of +9.4% recorded by L’Oréal in April is a figure that comforts investors on the possibility of a speedy recovery in the beauty sector.

There is still no news about it.

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