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Sales Slip at L'Oréal

April 15, 2014

A slowdown in North America is to blame.

A slowing market in North America, coupled with a high comparison to a year ago, resulted in L'Oréal reported a 2.2% decline in first quarter sales to 5.64 billion euros ($7.8 billion at current exchange rates). However, on a like-for-like basis, sales rose 3.5% and 2.8% at constant exchange rates. The company noted that while the L'Oréal Luxe and the Active Cosmetics divisions maintained good momentum, and the Professional Products division has returned to growth in Western Europe and the US, it was a different outcome in the Consumer Products Division, which was held back by North America, because of a high comparison base in the first quarter of 2013, linked to two major launches, and a sluggish trend in the mass-market channel over the first few months of the year.

Geographically speaking, Western Europe is on the mend, especially in Southern Europe, where regional sales grew for the first time in six years. In emerging markets, L'Oréal is recording good growth, particularly in Africa, Middle East and in Latin America.

Here's a closer look at first quarter results for the world's largest, pure play beauty company.

Professional Products: Sales fell 2.3% to 735 million euros. In luxury hair care segment, Kérastase continuned to grow due to the relaunch of Nutritive. Hair care is growing thanks to the promising start made by the new Biolage from Matrix. Growth in the pillar lines Inoa and Majirel at L'Oréal Professionnel is contributing to the solid performance of hair colorant. Styling sales are growing strongly, driven by Tecni Art from L'Oréal Professionnel and the styling products of Redken. The division is growing in all zones. In the mature markets, the countries of Southern Europe have returned to growth. In New Markets, the division remains very dynamic. The main contributors to growth are the US, Brazil, Russia and India.

Consumer Products: Sales fell 5.5% to 2.9 billion euros. L'Oréal Paris continues to expand, due to the success of Elvive Fibrology in Europe, Volume Filler in the US, and a strong increase in China. Meanwhile, Olia hair colorant by Garnier is continuing its roll-out, posting a record market share in Europe, and gaining ground in the New Markets. In facial skin care, the very good start made by Garnier Miracle Skin Cream is complementing the continuing global success of Revitalift Laser by L'Oréal Paris. And in makeup, L'Oréal Paris is launching its Mega Volume Miss Manga mascara and Maybelline is innovating in foundations with SuperStay Better Skin.

L'Oréal Luxe: Sales rose 2.7% to 1.4 billion euros. The division's five top brands, Lancôme, Yves Saint Laurent, Biotherm and particularly Giorgio Armani and Kiehl's,are growing. Sales are accelerating in makeup, particularly in face makeup with Lancôme and Shu Uemura, with the lip makeup of Yves Saint Laurent and Giorgio Armani, and Urban Decay which has performed exceptionally well with its Naked 3 palette. Skin care is being driven by Kiehl's, Blue Therapy by Biotherm and the worldwide expansion of Clarisonic. The fragrances Sì by Giorgio Armani and "La vie est belle" by Lancôme are continuing to prove highly successful. Viktor&Rolf is launching the women's fragrance Bonbon. The division is winning market share in a more dynamic Western Europe and in its traditional growth areas: China, the US and travel retail.

Active Cosmetics: Sales rose 3.9% to 488 million euros. Vichy posted significant growth, particularly in Western Europe, thanks to the launch of Neovadiol Elixir, and is growing in the face makeup segment with Teint Idéal. La Roche-Posay has made a very good start to the year with strong growth in Asia and in Europe. The same is true of SkinCeuticals, with a major antioxidant segment innovation: Revesratrol BE, antioxidant night concentrate. Across the zones, results are very positive in Europe, while Asia, and China in particular, are maintaining the momentum generated in the second half of 2013.