L’Oreal Shares Fall after Asian Sales Disappoint

This photo taken on February 16, 2018 shows a board with the L'Oreal logo outside of the L'Oreal plant, in Lassigny. (AFP)
This photo taken on February 16, 2018 shows a board with the L'Oreal logo outside of the L'Oreal plant, in Lassigny. (AFP)
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L’Oreal Shares Fall after Asian Sales Disappoint

This photo taken on February 16, 2018 shows a board with the L'Oreal logo outside of the L'Oreal plant, in Lassigny. (AFP)
This photo taken on February 16, 2018 shows a board with the L'Oreal logo outside of the L'Oreal plant, in Lassigny. (AFP)

Shares in L'Oreal fell 7.5% in early trading on Friday after the French cosmetics company reported fourth quarter sales growth that fell short of market expectations, reflecting a disappointing performance in Asia.

L'Oreal reported a 6.9% rise in fourth quarter sales after the market closed on Thursday, slower growth than in the previous quarter. Sales totaled 10.6 billion euros ($11.4 billion), shy of expectations for 10.9 billion euros, according to consensus estimates cited by Barclays

L'Oreal's travel retail business suffered from tighter control by the Chinese government of resellers known as "daigou". The resellers purchase inventory at lower prices in other markets and resell them at a discount in the mainland.

Analysts at Barclays said that they had expected Asia travel retail issues to take longer to be resolved than the market expected. They added that L'Oreal's top-line sales performance represented a "rare headline miss".

Analysts at Deutsche Bank said L'Oreal's performance in North Asia was "well below expectations."

"We are of the view that headwinds in China are structural not just cyclical," they said in a note.

L'Oreal nevertheless outperformed its main rival Estee Lauder. Sales at Estee Lauder declined 8% overall in the same quarter.

The company also said on Friday it had signed a licensing agreement with high end fashion label Miu Miu for beauty products.

L'Oreal expects to launch the first fragrances in 2025 under the agreement, which encompasses the creation, development, and distribution of beauty products.



Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
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Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)

Birkin-bag maker Hermes reported a 13% rise in second-quarter sales on Thursday, demonstrating the continued appetite from wealthy shoppers for its luxury handbags, even as less affluent consumers pull back.

Sales at the French luxury group grew to 3.7 billion euros ($4.02 billion), a 13% organic sales rise that strips out currency fluctuations. The figure was in line with analyst expectations, according to a Visible Alpha consensus.

Operating profit for the first half was 3.1 billion euros, compared to a forecast from consensus provider Visible Alpha for 3.2 billion.

One of the most steady performers in the luxury goods sector -- even as economic conditions worsen -- the French group's results stand out after a string of disappointing earnings updates from peers which have raised investor concern about uncertain prospects for the sector in the coming months.

Hermes' famously classic designs and tight management of production and stock have helped reinforce the label's aura of exclusivity, and CEO Axel Dumas told reporters the company had seen "no big interruption in trends".

However, he said Hermes was seeing slightly less traffic with aspirational clients, which was impacting higher volume products like fashion accessories.