Cosmetics giant L’Oreal saw a 6.9% increase in sales during the fourth quarter, signaling a slower pace of growth compared to the previous quarter. The Paris-based company, known for brands like Lancome and Maybelline, recorded sales of 10.6 billion euros ($11.4 billion), slightly below the expected 10.9 billion euros as per Barclays’ consensus estimates.
The company’s travel retail business, particularly in regions like Hainan and South Korea, faced challenges due to regulatory changes affecting Daigou resellers. These resellers purchase products at lower prices from other markets and sell them at a discount in mainland China.
Meanwhile, competitor Estee Lauder recently announced plans to reduce its global workforce by 3% to 5% to improve profitability, reflecting a trend of Chinese consumers cutting back on non-essential purchases amid economic uncertainties.
Despite economic challenges in China stemming from the Covid-19 crisis, including a property downturn and higher youth unemployment, L’Oreal has maintained a strong position in the market. The company commands the largest share of China’s $78.9 billion beauty and personal care market, with its luxury division leading in high-end cosmetics.
In contrast, Estee Lauder experienced an 8% decline in overall sales during the same quarter.
L’Oreal’s operating margin for 2023 met expectations, standing at 19.8%. Despite the modest sales growth in the fourth quarter, the company remains optimistic about its performance and market position moving forward.
