L’Oréal sees developed markets hold up in Q1 sales

By Andrew MCDOUGALL contact

- Last updated on GMT

L’Oréal sees developed markets hold up in Q1 sales

Related tags: Consumer products division, Chief executive officer, Executive officer, North america

L’Oréal saw its Group sales rise 1.8% for the first quarter 2016 to €6.55 billion, thanks to gains made in Western Europe and North America offsetting difficulties encountered in some emrging markets due to the strengthening euro.

On a like-for-like basis, sales grew 4.2% in a three-month period, with all four divisions: Consumer, Professional, Luxe, and Active Cosmetics; posting an increase.

“The Group made a solid start in the first quarter, with growth in all our divisions and geographic zones: the Consumer Products Division accelerated at the start of the year, recording its best quarter for almost three years,”​ says Jean-Paul Agon, Chairman and Chief Executive Officer of L'Oréal.

“L’Oréal Luxe started the year well in line with expectations, despite a difficult comparison base in Hong Kong and in the Travel Retail channel, and is continuing to roll out its brand portfolio worldwide. Sales in the Professional Products and Active Cosmetics Divisions should strengthen over the coming quarters.”

Currency conditions

With mature markets holding strong and helping to offset the challenges faced in other markets, such as Latin America where currency fluctuations previously helped, it is a different situation to the one seen at the end of 2015, when sales grew 8.5% with the help of favourable currency conditions.

It shows how the market has shifted this year, as compared to last year when companies were benefitting from a weak euro and strong dollar; they are now negatively impacted by currency volatility.

This has seen mature markets, where it has been difficult to grow of late, become an influential area for growth, particularly for L’Oréal.

In the first quarter, Western Europe grew by 2.% like-for-like and 1.3% based on reported figures, as although the competition makes the situation in France very challenging, sales continue to grow, driven mainly by L'Oréal Luxe and a good performances of the four Divisions in the United Kingdom and Spain.

North America has also been a ray of light in the first quarter as L'Oréal grew by 4.3% like-for-like and 5.8% based on reported figures, with the Consumer Products Division starting the year very well, driven in make-up by the very strong growth of NYX Professional Makeup and Maybelline; but also in hair care by the launch of Whole Blends by Garnier.

L'Oréal Luxe and the Professional Products and Active Cosmetics Divisions are also delivering good growth, thanks to the strong performances of Urban Decay and Yves Saint Laurent, Redken and Matrix, and SkinCeuticals.

“Across the geographic zones, North America is confirming its dynamism, Western Europe remains solid and the New Markets are proving resilient,”​ continues Agon.

“The Group’s digital acceleration is continuing, with growth of +35% in e-commerce*, which is expanding strongly in each division.”

To conclude, Agon adds that in an economic and monetary environment that remains volatile, L’Oréal is confident that the power of its innovations, the international roll-out of its brands and the commitment of its teams will lead it to outperform the cosmetics market in 2016.

“We are confirming our ambition of achieving another year of sales and profit growth,”​ he says.

Changes afoot

There is also news to announce regarding the French firm’s management team after Marc Menesguen, President Consumer Products Division, decided to retire at the beginning of 2017 after contributing to L’Oréal’s development for more than 30 years.

Menesguen has been at the company since 1985, and will be succeeded by Alexis Perakis-Valat, currently Executive Vice-President Asia Pacific Zone, who will take on the role of Executive Vice-President Consumer Products Division.

Perakis-Valat will be succeeded by Jochen Zaumseil, currently Executive Vice-President Western Europe Zone, who will be replaced in his role by Vianney Derville, currently General Manager of the Consumer Products Division North America.

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