L’Oreal results point to sales recovery in Q2
The company reported sales were down 2.1 percent on a like-for-like basis during the second quarter, to reach €4.40bn, a figure that represented an increase of 2.6 per cent on a reported basis.
For the full six months like-for-like sales were down 3.2 per cent to €8.77bn, up 1.4 percent on a reported basis, reflecting particularly tough trading conditions in the first quarter.
On a geographical basis the company said that India was accelerating, while China and Brazil were maintaining previously strong levels of growth. Likwise Mexico and Russia were both showing signs of improvement.
Europe suffers on luxury sales
Europe was hard hit, with sales falling 8.0 per cent, a figure that the company said was attributable to a decline in sales for its luxury division in a recession-hit retail market.
Referring to the results as an ‘improve performance’, CEO Jean-Paul Agon attributed the improvements to accelerated initiatives by the company in all regions and a lower inventory reduction by distributors.
“Sales trends remain extremely differentiated across the divisions: the Consumer Product Division is accelerating its growth and strengthening its worldwide positions," Agon said.
“In markets that are still down, the Professional Products Division is significantly increasing its penetration in hair salons, and the Luxury Products Division is achieving notable successes with its latest launches, particularly at Lancome."
India, China and Brazil lead developing markets
On a geographical basis the company said that India was accelerating, while China and Brazil were maintaining previously strong levels of growth. Likwise Mexico and Russia were both showing signs of improvement.
Europe was hard hit, with sales falling 8.0 per cent, a figure that the company said was attributable to a decline in sales for its luxury division in a recession-hit retail market.
Of the company’s six divisions, which includes the Body Shop and the Galderma Dermatology businesses, its Luxury Products division was hardest hit on a like-for-like basis during the second quarter, with sales plummeting 8.3 percent to €969m.
The company said that the result were impacted by the recession, which has hit the luxury segment hard, however, it pointed out that the trend for the second quarter was improving as distribution inventory levels recovered.
Professional products struggles on inventory reduction
Professional Products saw sales fall by 4.8 per cent on a like-for-like basis to €617m, a performance that has been impacted by a sharp downturn in this category, compounded by inventory reduction.
Things looked better in the company’s biggest division, Consumer Products, where sales for the second quarter increased by 0.9 per cent to €2.2bn, driven by robust launch activity that included Revitalift for face and neck contours and Fructis Oil Repair triple nutrition.
L’Oreal says that given the improvements in its overall performance, and particularly the developing markets, it now believes that business will improve during the second half of the year.
