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L’Oreal Global Sales Rise

NEW YORK — L’Oréal’s 2004 global sales rose 3.6 percent to 14.53 billion euros, or $18.09 billion at average exchange. On a like-for-like basis global sales rose 6.8 percent.<BR><BR>Active cosmetics, the company’s smallest...

NEW YORK — L’Oréal’s 2004 global sales rose 3.6 percent to 14.53 billion euros, or $18.09 billion at average exchange. On a like-for-like basis global sales rose 6.8 percent.

Active cosmetics, the company’s smallest segment, made the greatest strides over the course of the year. According to the company, active cosmetics was the market leader for skin care products sold through pharmacies, with sales growing 13.8 percent to 852 million euros, or $1.06 billion. At constant exchange rates, sales rose 15 percent. The improvements were attributed to a product line, called Inneov, grabbing the top spot in the antiaging market, combined with the successful launch of Inneov Hair Mass.

Launches from L’Oréal Paris, Garnier and Maybelline helped the consumer products division grow sales by 3.3 percent to 7.75 billion euros, or $9.64 billion. Sales rose 5.8 percent excluding currency fluctuations.

The company’s luxury products segment grew 2.3 percent to 3.52 billion euros, or $4.38 billion, or 5.2 percent at constant currencies. The figures were spurred by sales of Armani Black Code perfume, Biotherm’s Line Peel cream and Lancôme’s Hypnôse mascara. Management also pointed to the opening of Lancôme, Biotherm and Kiehl’s Since 1851 boutiques as key drivers.

Sales of professional products increased 5.2 percent to 2 billion euros, or $2.49 billion. They rose 7.6 percent excluding currency fluctuations.

Western Europe remained the company’s largest region, with sales rising 1.3 percent  to 7.31 billion euros, or $9.10 billion, and 1.1 percent at constant exchange rates. Spain and the U.K. posted the largest sales gains. However, “stock reduction” adversely affected sales of luxury products in France and Germany.

In North America, management said Fructis by Garnier had achieved a “breakthrough” during the year, supported by continued growth in Kiehl’s and Lancôme. Sales for the region fell 0.3 percent at current currencies but at constant currency rates grew 8.1 percent, to 3.77 billion euros, or $4.69 billion.

Management is making it clear that capitalizing on other international markets will be the key to future growth. Momentum continues to build in Asia, with sales in the region vaulting 19.3 percent in published figures and 17 percent on a like-for-like basis to 1.27 billion euros, or $1.58 billion. Sales doubled in China, according to the company, while Hong Kong and Taiwan posted like-for-like growth of 36 percent and 22 percent, respectively.

This story first appeared in the February 18, 2005 issue of WWD.  Subscribe Today.

Sales in Eastern European countries spiked 27.3 percent — and 29.3 percent on a constant currency basis — to 524 million euros, or $651.8 million, led by the Russian Federation nations with a 42 percent spike on a like-for-like basis. Sales in Poland increased 18 percent on a like-for-like basis, while the Czech Republic grew 20 percent.

Argentina, Australia, Brazil, India, Mexico and Turkey also posted double-digit sales growth.

“Top-line growth was good in a very tough year (two-times market growth, after all),” continued Eva Quiroga, an industry analyst with UBS. “Margins were certainly above our forecast, but — to be honest — we had assumed a smaller decline in external charges, which pretty much explains the difference.”

A second analyst, who requested anonymity, added: “Increased dividend and share buybacks are positive signs of management’s willingness to return cash to shareholders. It is a solid set of numbers driven by both North America and the rest of the world. Results were in line with street expectations, although quality was somewhat weak.”