L’Oréal has reported strong sales growth of 7.7 percent, to 7.55 billion Euros, or $8.47 billion at current exchange rates. Notably, at a regional level, the highlight is Asia Pacific, which is up 23.2 percent, despite China’s slowing economy, outpacing growth in L’Oréal’s home market of Western Europe. The zone not only experienced strong sales in China, but also in India, Indonesia and Malaysia, which have all posted double-digit growth. Yves Saint Laurent and Giorgio Armani, along with premium skin care brands, are reporting the strongest growth in the region. Stylenanda, a South Korean makeup brand acquired by the company in June 2018, “is making significant progress” and is already bolstering growth in the Consumer Products Division.
“Asia has become the number-one region for L’Oréal. This is the first time this has happened in the history of the company,” Jean-Paul Agon, Chairman and CEO of L’Oréal, said on the company’s earnings call. He noted that Chinese consumers, especially millennials, have a strong appetite for luxury brands. Furthermore, there aren’t many local luxury players experiencing strong momentum, allowing L’Oréal’s Western brands the ability to gain market share.
Performance among L’Oréal’s various divisions continues to be highly differentiated. The Luxe Division performed well, led by its four major brands: Lancôme; Yves Saint Laurent; Giorgio Armani and Kiehl’s, all of which posted more than 15 percent growth, and showed strong development in Asia. Fragrance also experienced solid performance, most notably with Atelier Cologne. The Active Cosmetics Division posted double-digit growth at 13 percent, growing in every region of the world. Top performing brands include La Roche-Posay, Vichy and CeraVe.
“Asia has become the number-one region for L’Oréal. This is the first time this has happened in the history of the company.” — Jean-Paul Agon, Chairman and CEO, L’Oréal
Growth in the Consumer Products Division, which houses brands such as Garnier and Maybelline, is gradually improving and is up 3.3 percent. L’Oréal Paris had a strong start to the year, thanks in particular to face care, including Revitalift Filler and Age Perfect, as well as the very successful launch of Rouge Signature in makeup. Garnier is continuing its acceleration that began in the fourth quarter of 2018. Growth in hair care led the way, boosted by the success of Fructis Hair Food and the strength of Ultra Doux. Face care and a strong start for Garnier Organic in Europe were factors as well. The Professional Products Division’s performance is up 2.2 percent, growing in the U.S. at a steady pace, while the Asia Pacific Zone posted a strong increase, reinforcing its role as a growth driver.
“Despite a volatile, uncertain and contrasted economic environment, this positive start to the year gives us confidence in our capacity to outperform the market in 2019 and see another year of growth in sales and profits,” said Jean-Paul.