L’Oreal shares fell on Friday, sinking to their lowest level since March, after a larger-than-expected hit to its travel retail business in Asia and disappointing sales of its luxury division as inflation and a choppy economic environment curb high-end spending.
Shares were down 2.6% in early trading, the lowest performer on the Paris CAC-40 index.
A slowdown in the luxury division was most likely expected after LVMH’s perfume and cosmetics division slightly missed expectations last week, but 3.2% growth versus consensus expectations of 12.2% likely comes as a negative surprise to the market, Jefferies analysts said.
Analysts also pointed to a sharper-than-expected hit to business in Asia from tighter controls by the Chinese government of daigou resellers, who buy products at lower prices abroad and resell them at a discount in China.
Although weakness in North Asia because of travel retail issues and the luxury division was expected by investors, the scale of the miss "took us by surprise," analysts at Barclays said.
