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L’Oreal First-Qtr. Sales Inch Ahead 2.1 Percent… Makeup, Men’s Perform Well in Germany

On the back of a difficult trading environment in North America and a strong euro, L’Oreal reported first-quarter 2008 sales of 4.36 billion euros, or $6.53 billion at average exchange, up 2.1 percent over the same period last year. On a...

PARIS — On the back of a difficult trading environment in North America and a strong euro, L’Oréal reported first-quarter 2008 sales of 4.36 billion euros, or $6.53 billion at average exchange, up 2.1 percent over the same period last year. On a like-for-like basis, revenues gained 5.1 percent.

The net impact of changes in consolidation — primarily the acquisitions in the U.S. of PureOlogy, Beauty Alliance, Maly’s West and Columbia Beauty Supply, and in Turkey, of Canan — was 2 percent.

“In the first quarter, we achieved globally satisfactory growth: excluding North America, where the environment was exceptionally difficult, the group achieved growth of 7.5 percent, in line with our projections,” stated Jean-Paul Agon, chief executive officer of the company.

“In North America, after an exceptional fourth-quarter 2007, we had been anticipating a lackluster first quarter,” he continued. “In fact, it turned out to be more difficult because of lower footfall in department stores and larger-than-expected inventory reductions by our distributors.”

First-quarter sales for L’Oréal in North America fell 7.2 percent to 893 million euros, or $1.34 billion. On a like-for-like basis, they dropped 3.9 percent.

“The rest-of-the-world zone continued to grow very strongly, particularly in Asia and Eastern Europe, and is fully playing its role as a powerful growth relay,” continued Agon. “In Western Europe, the start of the year is in line with our expectations in a market which remains solid.”

In the period, the rest-of-the-world zone’s business hit 1.29 billion euros, or $1.93 billion, up 12.1 percent, or 16.7 percent on a comparable basis. Of that, L’Oréal’s Asian business reached 464 million euros, or $695 million, up 13.7 percent, or 21.9 percent on a like-for-like basis. In Eastern Europe, the company registered revenues of 359 million euros, or $537.7 million, a 24.1 percent gain, or 25.9 percent growth on a comparable basis.

In Western Europe, L’Oréal posted sales of 1.94 billion euros, or $2.9 billion, up 1 percent, or 2.3 percent on a like-for-like basis.

Currency fluctuations negatively impacted L’Oréal’s sales by

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5 percent.

By operational division, the company’s professional products’ business came in at 620 million euros, or $928.6 million, rising 14.5 percent from the prior-year period. Consumer products’ revenues were flat at 2.15 billion euros, or $3.22 billion; luxury products’ sales inched up 0.2 percent to 930 million euros, or $1.39 billion, and active cosmetics’ revenues gained 3.8 percent to 408 million euros, or $611.1 million.

L’Oréal remains bullish about the future.

“We are confident in our ability to accelerate our growth over the coming quarters, thanks to favorable launch phasing, better prospects in North America and continuing dynamism in other zones. We are therefore able to confirm our annual like-for-like growth target range of 6 percent to 8 percent,” Argon said.
— Jennifer Weil

Makeup, Men’s Perform Well in Germany

BERLIN — Luxury cosmetics lines underperformed in Germany in 2007, though makeup and men’s products bucked the trend.

Last year was anything but strong for Germany’s luxury cosmetics market, according to the VKE, or the German Association of Cosmetic Producers — whose 200 member brands represent 35 percent of Germany’s cosmetics products market. In, 2007 industry sales totaled 1.57 billion euros, or $2.15 billion at average exchange, an increase of just 0.9 percent.

However, manufacturers have hopes for modest growth in 2008, according to a recent VKE report.

The largest reported drop was a 3.8 percent decline in sales of women’s facial care products and sun care, a performance that was considerably below industry expectations. Women’s fragrance also performed below projections, showing a 3.6 percent drop.

Going opposite the downward trend were men’s products, including fragrances, shaving items and skin care products. Men’s showed above average growth, with a 10.1 percent increase. New choices in facial care products on the shelves, and a growing interest in and acceptance of personal care lines targeting men helped this category to grow.

Decorative cosmetics also marked a notable bright spot, with a 5.8 percent increase, tied to the launch of new and high-end products. Consumer interest in antiaging and wellness products helped give the body care segment a modest boost of 1.4 percent.

VKE managing director Martin Ruppmann said his group’s member companies were somewhat positive about increased sales in 2008, and said the association anticipates up to 2 percent growth this year.

That small number may be a big deal for some. A December 2007 VKE survey found 24 percent of members reporting said earnings decreased.
— Susan Stone