L’Oreal shares down 5% on lower-than-expected sales, slowdown in Asia

LONDON — L’Oreal shares fell more than 7.3% in early deals Friday, before slightly paring losses, as the company reported lower-than-expected sales and pointed to a slowdown in demand in Asia.

Shares of the stock had recovered slightly to trade down by 5% at 10:40 a.m. London time.

The world’s largest beauty brand on Thursday reported fourth-quarter sales below estimates, rising 2.8% to 10.6 billion euros ($11.4 billion). Barclays analysts had anticipated a figure near 10.9 billion euros, according to Reuters.

The company, which owns brands such as Lancôme and Kiehl’s, also logged a 7.6% increase in 2023 full-year sales to 41.18 billion euros ($44.37 billion).

The quarterly shortfall was led by activity in North Asia, including China, where sales fell 6.2% over the three-month period. Sales were otherwise up in Europe and North America.

CEO Nicolas Hieronimus said Friday that the company remains very ambitious in China, adding that it has strong growth plans for the country in 2024 and beyond, according to Reuters.

The luxury sector has been under pressure since late 2023, as tough macroeconomic and geopolitical conditions have weighed on consumer spending, notable in the U.S. and China.

Still, certain high-end brands appear to have bucked the trend, continuing to attract increasingly selective shoppers.

Shares of Hermes were up 4.5% Friday morning after reporting a surge in sales as wealthy consumers continue to seek its exclusive Birkin handbags and silk scarves despite rising prices.