by Mimosa Spencer
PARIS (Reuters) – L’Oréal reported on Thursday a 6.9% increase in its sales in the fourth quarter, slower growth than in the previous quarter, its “travel retail” activity (sales to travelers) continuing to feel the effects of new regulations on the parallel resale market in China.
The turnover of the owner of the Lancôme and Maybelline brands reached 10.61 billion euros in the fourth quarter, slightly below expectations at 10.9 billion euros, according to estimates cited by Barclays.
Sales activities to travelers, particularly in Hainan and South Korea, have been penalized by the Chinese government’s crackdown on the parallel resale market, called Daigou. Resellers buy inventory at lower prices from other markets in order to resell it on the continent.
Estee Lauder announced plans earlier this month to reduce its global workforce by 3% to 5% to improve margins as Chinese customers reduce their purchases of non-essential products.
China’s economy has not rebounded as quickly as expected after the end of COVID-19 lockdowns, weighed down by a housing crisis and rising youth unemployment.
L’Oréal has fared better than Estee Lauder in China, where the French company has the largest share of the $78.9 billion beauty and personal care market. Its luxury division occupies first place in the high-end cosmetics market.
Estee Lauder sales fell 8% during the same quarter.
L’Oréal’s operating margin for 2023 came in at 19.8%, in line with expectations.
(Report by Mimosa Spencer, French version by Dagmarah Mackos, edited by Kate Entringer)
Copyright © 2024 Thomson Reuters