L’Oreal sees China improving after weak quarter hits shares

PARIS: L’Oreal’s sales in China are growing and travel retail there should improve, its CEO said on Friday, after the beauty group’s shares fell when it missed quarterly sales forecasts and reported weaker-than-expected Asian trading.

Fourth-quarter sales rose 6%, below market expectations of about 7%. The Paris-based owner of Maybelline posted revenue of 11.3 billion euros ($13.4 billion), but growth in North Asia slowed as travel-retail sales came in softer than hoped.

The shares were down about 3.5% in mid-morning trade, after dropping as much as 7% earlier.

China is in “positive territory, back to positive luxury consumption,” CEO Nicolas Hieronimus told analysts.

“On (Chinese) travel retail, it’s true it was not like we expected,” Hieronimus said, blaming this partly on problems with a duty-free retail shopping app. He said inventories had not built up and that airport traffic was improving, adding the company expected that market to be “flattish” this year.

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L’Oreal had highlighted improving demand for its luxury brands in China - the world’s second-biggest beauty market – in the third quarter.

Hieronimus said skincare would be another priority in 2026, after the company failed to outpace the market in 2025, breaking an eight-year run. He partly blamed increased competition from independent brands, some of which he said made “fantasy claims” about what their products could deliver.

JP Morgan analysts said in a note to clients that while Europe and emerging markets supported performance, they remained cautious on European demand in 2026. “The fourth-quarter setup makes it difficult to envision top-line acceleration in full year of 2026,” they said.

Deutsche Bank Research also said earnings growth was likely to slow in the near term.