PARIS — L’Oréal’s Luxe division boosted the group’s first-quarter sales, which gained 7.5 percent versus the same prior-year period.
Revenues at the world’s largest beauty company reached 7.05 billion euros, or $7.74 billion at average exchange, in the three months ended March 31. On a like-for-like basis, the sales rose 4.2 percent, with 3.6 percent coming from volumes and 0.6 percent stemming from price.
The results, which were released by the maker of Lancôme and Kiehl’s products after the close of the bourse here on Tuesday, surpassed financial analysts’ consensus estimate of a 3.9 percent increase in constant terms.
“It was a slight beat and will undoubtedly position L’Oréal at the very top of the European [household and personal care] — and much of the American — peer group,” said Eva Quiroga, an analyst at Deutsche Bank.
“But behind the solid exterior, [it] was a fairly crazy quarter,” wrote Andrew Wood, an analyst at Sanford C. Bernstein & Co. LLC, which had projected a 3.6 percent sales increase, in a research note.
He lauded the 12.2 percent gain posted by the Luxe division — which was driven by the strong consumption of luxury products, particularly in Asia — its highest growth level since the first quarter of 2012, and that widely beat consensus expectations of 6 percent. Sales for the division totaled 2.16 billion euros, or $2.37 billion.
“The three other businesses all posted disappointing figures,” continued Wood, referring to Consumer Products’ 1.4 percent sales uptick to 3.23 billion euros, or $3.55 billion; Professional Products’ 1.8 percent revenue decline to 858.2 million euros, or $942.6 million, and Active Cosmetics’ 2.8 percent sales rise to 603.2 million euros, or $662.6 million.
A decision about The Body Shop’s strategic direction, which is under consideration, should be made within a few months, said Christian Mulliez, L’Oréal’s executive vice president and chief financial officer, during a call with analysts and journalists on Tuesday evening.
That activity’s sales declined 1.4 percent to 197.2 million euros, or $216.6 million, in the quarter.
On a geographic basis, L’Oréal revenues in Western Europe remained buoyant despite a disappointing start in France — L’Oréal’s home base, where slightly less than 8 percent of company sales are made — and due to strong rates of growth in the U.K., Germany and Spain. North America’s dynamism was ongoing, and the New Markets, especially Eastern Europe and Asia, performed solidly. Brazil and the Middle East proved more difficult.
Digital kept growing in importance, with e-sales advancing 27 percent in the period and generating 6.8 percent of the group’s total revenues.
Jean-Paul Agon, L’Oréal chairman and chief executive officer, said the cosmetics market worldwide logged an estimated 3.5 percent gain in the first quarter, and that the outlook for the rest of 2017 is good.
“The latest information we have is pretty positive,” he said, giving as an example that the mass market has been accelerating in the U.S. this month, allow it to come back to its normal rate of growth. The executive said Western Europe is also slowly improving, as well.
“We see that luxury is still good, that active cosmetics — the dermocosmetics — market is still good,” Agon continued. “So we believe that after the strange beginning of the year, the market is going to get back to a 4 percent [growth] average.”
L’Oréal executives reiterated forecasts, confirming that the company is expected to outperform the market in both sales and profits this year.