L'Oreal Sales Beat Estimates as Consumer Unit Accelerates Getty Images

L'Oreal Sales Beat Estimates as Consumer Unit Accelerates

L’Oreal’s consumer unit, which sells products such as Garnier shampoo and Maybelline New York mascara, was the main beneficiary of what L’Oreal called North America’s “dynamism.” 

L’Oreal SA reported first-quarter revenue that beat analysts’ estimates as strong demand for its NYX makeup helped speed up growth in North America, compensating for a slowdown in parts of Asia and Latin America.

Sales rose 1.8% from a year earlier to 6.55 billion

L’Oreal’s consumer unit, which sells products such as Garnier shampoo and Maybelline New York mascara, was the main beneficiary of what L’Oreal called North America’s “dynamism.” Like-on-like revenue at the unit, the company’s biggest, jumped 3.9%, the fastest quarterly increase in almost three years. That helped compensate for slowing sales of luxury cosmetics in Hong Kong, where fewer Chinese shoppers are traveling, and weakness in Brazil, where demand surged last year before a tax increase took effect.

“The biggest positive surprise was the performance of consumer,” said Andrew Wood, an analyst at Sanford C. Bernstein who predicts the stock will rise on Tuesday. Though the active-cosmetics and professional-products units trailed estimates, “consumer is much more important, and so this drove total company outperformance.”

L’Oreal reiterated a forecast for sales and profit growth in 2016, even “in an economic and monetary environment that remains volatile,” and said it’s confident of outperforming the cosmetics market’s expected expansion of about 3.5%. Full-year revenue will increase faster than in the first quarter, Chief Executive Officer Jean-Paul Agon said on a conference call. The operating margin will probably also widen, said Chief Financial Officer Christian Mulliez.

In a separate statement, L’Oreal said Asia chief Alexis Perakis-Valat will succeed  Marc Menesguen as head of the consumer division in September. Menesguen, who has worked for the company for three decades, will retire at the end of this year, Agon said.

TAGS: Leadership
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