PARIS — The recent softening of sales in North America and Western Europe, especially its home market of France, prompted L’Oréal Thursday to cut its full-year sales growth forecast to 4 percent from the 6 percent projection it made in August.
The projection is for “like-for-like” sales, which exclude currency fluctuations as well as changes in corporate structure.
The global beauty leader, accustomed to reporting double-digit growth, posted a third-quarter sales increase of 3.4 percent at constant exchange to 4.27 billion euros, or $6.43 billion at average exchange for the period. On a like-for-like basis, the sales increase was reduced to 2.7 percent.
The showing took L’Oréal’s nine-month sales to 12.91 billion euros, or $19.66 billion, an increase of 2.2 percent, or 4.4 percent like-for-like. Excluding only currency fluctuations, growth for the period was 7.4 percent.
“In view of this tougher environment which remains uncertain, we now consider it more prudent to forecast 2008 like-for-like sales growth close to that reached at nine months — i.e. approximately plus-4 percent,” stated Jean-Paul Agon, L’Oréal’s chief executive officer.
“Since September, we have noted a clear slowdown in some markets in Western Europe and North America, and have been confronted with a contraction of purchasing by some distributors in view of the current economic crisis,” he continued.
“We were particularly handicapped by the challenging French market, which represents a significant percentage of our sales,” he added during a conference call.
During the quarter, sales in Western Europe rose 3.9 percent to 1.74 billion euros, or $2.65 billion at average exchange. On a like-for-like basis, business dipped 1.8 percent. France was particularly impacted in the pharmacy and mass market channels, Agon explained, leaving overall business for the country flat. North America, meanwhile, was hit by a slowdown in beauty salons and consumer products. Sales fell in that region by 10.8 percent to 925.7 million euros, or $1.39 billion, and by 5.7 percent like-for-like.
The “rest of the world” region continued to drive growth, generating 15.6 percent gains during the quarter to hit 1.31 billion euros, or $1.97 billion. Particularly strong showings came from Asia, which grew 13.9 percent, and Eastern Europe, which jumped 29.6 percent.
The Body Shop’s sales fell 2.2 percent in the quarter, to 176.2 million euros, or $265.5 million, and rose 8.1 percent on a like-for-like basis.
By division, consumer products, the firm’s largest division, dipped 0.9 percent to 2 billion euros, or $3 billion. Growth during the quarter was impacted by launch phasing and by early invoicing for its Maybelline and Garnier brands in the U.S. in the second quarter, which pulled third-quarter sales down 1.7 percent.
Luxury products, L’Oréal’s second-largest division, achieved a strong performance. Sales reached 1.1 billion euros, or $1.66 billion, a 15.3 percent leap. Professional products, meanwhile, slipped 2.7 percent to 599.4 million euros, or $903 million, while active cosmetics grew 5.1 percent to 281.9 million euros, or $423 million.
As they did in the third quarter, currency fluctuations dragged down year-to-date results, subtracting 5.2 percent from sales growth.
Analysts were disappointed by the performance. During the conference, some expressed doubt that L’Oréal would be able to hit its 4 percent year-end growth target, given that it hadn’t achieved that figure in the three months ended Sept. 30.
The company also announced it is to close an as-yet-unnamed factory in the U.K. Earlier this month, L’Oréal said it would shutter its Sofamo-Biotherm plant in Monaco in 2011, cutting 198 jobs.
Despite the grim outlook, Agon said L’Oréal would maintain its advertising and promotional spend for the rest of the year “in order to prepare for 2009 in the best possible conditions.”�
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)