L'Oreal's third-quarter revenue rose 4.8 percent on a like-for-like basis as strong luxury sales offset lacklustre mass market demand, a pace the French cosmetics maker's head said was likely to be maintained for the rest of the year.
The maker of perfumes, cosmetics and creams, whose sales were in line with forecasts, reiterated its full-year goal to outperform the market and increase sales and profitability.
"The fourth quarter should be more or less in the same vein as the third," L'Oreal Chief Executive Jean-Paul Agon told a conference call, adding: "We are cautious for the fourth quarter. You know the world right now is quite unpredictable so we prefer to be cautious." Wood noted that the growth was significantly below that shown by rivals like Estee Lauder and Unilever, adding that he wondered "how long investors will be prepared to give L'Oreal its elevated valuations given such relatively lacklustre results."
L'Oreal is benefiting from the overall resilience of the luxury industry in the face of an uncertain global economy. Its luxury division posted 8.8 percent quarterly like-for-like growth, contributing just over a quarter of sales.
LVMH, the world's largest luxury goods group, saw its perfumes and cosmetics achieve 10 percent organic growth in the first nine months of the year, it said last month. Last week, high-end Estee Lauder, whose brands include Clinique and MAC, raised its targets for the year after strong demand for its make-up and skin-care products helped it beat quarterly estimates with net sales up 14 percent excluding foreign currency.
"Around the world you still have many, many people with a lot of money and these people they want to spend their money and they want to buy good beauty products ... and for the moment it's true that we don't see any slowing down of this trend," L'Oreal CEO Agon said.
Estee Lauder said demand was particularly robust in Asia, including in China, Hong Kong, South Korea, Taiwan and Thailand, while it was confident about its business in Europe thanks to market share gains despite a tough consumer spending climate.
L'Oreal pointed to strong luxury demand in the United States, South Korea, China and Hong Kong.
Growth in consumer brands like Garnier and Maybelline slowed to 3.4 percent on a like-for-like basis in the third quarter from 5.2 percent in the first half, L'Oreal said.
Overall, growth was dominated by demand in Asia, Latin America and North America, though the third quarter saw a deceleration in Brazil and a slowdown compared with the first half in North America.
Via Xavier Obon