PARIS — French cosmetics group L’Oreal beat third-quarter (Q3) sales forecasts on Thursday, as shoppers around the world indulge in more pricey haircare and premium skin products.
The Paris-based maker of CeraVe moisturizer and Prada perfumes has doubled down on its premium offer in recent years, adding more couture perfumes to its stable of blockbuster names and rolling out new haircare products under its professional hair salon brand Kerastase.
Its weight in both segments is allowing it to profit from growing global spending on beauty, including in China, where demand for higher-end brands is accelerating.
Sales from July to September rose 7.7 percent on an adjusted like-for-like basis to 11.56 billion euros ($12.95 billion), topping analysts’ consensus forecast for 5.9-percent growth in a Visible Alpha poll. The number strips out currency effects and the effects from phasing in of a new global IT system.
“The global beauty market, once again, proved its resilience in a challenging context — and we continued to significantly outpace it,” CEO Nicolas Hieronimus said in a statement.
L’Oreal’s US-listed shares rose 8.3 percent after the sales report.
Beauty has been a bright spot in an otherwise sluggish consumer goods sector, with analysts and executives pointing to the “lipstick effect” of consumers treating themselves to affordable luxuries during challenging times.
L’Oreal’s luxury division, which generates more than a third of group revenue, grew 7 percent on a like-for-like basis, well ahead of a 4.5-percent forecast, helped by strong demand for its best-selling fragrances like Prada Paradigme and for high-end skin care in China.
China’s beauty market is expanding again after two years of contraction, as middle-class consumers shift spending from entry-level luxury goods toward prestige beauty products.
Growth slowed slightly in the third quarter against a tougher base of comparison than earlier in the year, Hieronimus told analysts on a call, but some brands like Helena Rubinstein are growing in “high double-digits.”
“Our products are more affordable than higher-priced luxury and consumers are indulging in them,” he said.
Other skin care lines like SkinCeuticals and La Roche-Posay, which has launched new sunscreen and serums, are also growing in double-digits, he added, while the company is also targeting consumers using GLP-1 weight-loss drugs, promoting products aimed at addressing secondary effects such as sagging facial skin.
Sales in Europe, L’Oreal’s biggest market, rose nearly 9 percent, while revenue in South Asia and the Middle East jumped 19.5 percent on strong demand in Gulf countries and Vietnam.
Shares in L’Oreal, France’s most valuable listed company, are up 11 percent this year.
