PARIS: L'Oreal reported a 13% rise in first-quarter sales, beating expectations thanks to strong business in the United States and Europe as shoppers shrugged off rising prices, but has yet to benefit from the end of COVID-19 curbs in China.
Sales of the French cosmetics group, which sells brands ranging from Maybelline to Lancome, came to 10.38 billion euros ($11.37 billion) over the first three months to the end of March.
The 13% increase on an organic basis beat analysts' expectations for 8.1% growth, according to a consensus estimate cited by Barclays.
Sales in Europe and North America grew by 16% and 16.6% respectively, with the company flagging strong performance from its consumer products division, which has been moving upmarket, as well as its dermatological beauty division, which sells CeraVe skincare.
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In mainland China, where the company said luxury sales were flat due to low inventories, consumer demand and store traffic resumed from February.
"These are truly outstanding numbers," despite China "still being a drag," said Bruno Monteyne, analyst with Bernstein, noting that sales growth for every division beat expectations, with a standout performance from the dermatological beauty division, up 30.6%.
The division's ties to healthcare professionals like pharmacists and dermatologists "cement long-term brand loyalty and are extremely powerful in directing consumer choice," said Gerrit Smit, manager of the $1.9 billion Stonehage Fleming Global Best Ideas Equity Fund, a L’Oreal investor.
L'Oreal Chief Executive Nicolas Hieronimus said in a call with analysts that he was confident sales at the company's luxury division, which rose 6.5%, would accelerate, driven by a rebound in China where it has over 31% market share.
He said that while inflation and the risk of recession had not disappeared, "we see blue patches", citing rising consumer confidence in the United States and China.
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