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L’Oreal shares fall after Asian sales disappoint

2024.02.09 03:57


© Reuters. FILE PHOTO: The emblem of French cosmetics group L’Oreal is seen on an organization constructing in Paris, France, February 7, 2024. REUTERS/Sarah Meyssonnier/File Photo

By Mimosa Spencer

PARIS (Reuters) -Shares in L’Oreal fell 7.5% in early buying and selling on Friday after the French cosmetics firm reported fourth quarter sales progress that fell in need of market expectations, reflecting a disappointing efficiency in Asia.

L’Oreal reported a 6.9% rise in fourth quarter sales after the market closed on Thursday, slower progress than within the earlier quarter. Sales totalled 10.6 billion euros ($11.4 billion), shy of expectations for 10.9 billion euros, in accordance with consensus estimates cited by Barclays

L’Oreal’s journey retail enterprise suffered from tighter management by the Chinese authorities of resellers referred to as “daigou”. The resellers buy stock at decrease costs in different markets and resell them at a reduction within the mainland.

Analysts at Barclays mentioned that they’d anticipated Asia journey retail points to take longer to be resolved than the market anticipated. They added that L’Oreal’s top-line sales efficiency represented a “rare headline miss”.

Analysts at Deutsche Bank mentioned L’Oreal’s efficiency in North Asia was “well below expectations.”

“We are of the view that headwinds in China are structural not just cyclical,” they mentioned in a notice.

L’Oreal however outperformed its essential rival Estee Lauder (NYSE:). Sales at Estee Lauder declined 8% total in the identical quarter.

The firm additionally mentioned on Friday it had signed a licensing settlement with excessive finish style label Miu Miu for magnificence merchandise.

L’Oreal expects to launch the primary fragrances in 2025 underneath the settlement, which encompasses the creation, improvement, and distribution of magnificence merchandise.

(Additional Reporting by Piotr Lipinski; enhancing by David Evans, Jason Neely, Matt Scuffham and Barbara Lewis)

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