L'Oreal says luxury growth slows, Asia tough
PARIS (Reuters) - L'Oreal's (OREP.PA) sales trends continued to worsen by the end of September for the third quarter running, particularly for its luxury and professional products, the world's biggest cosmetics group said on Tuesday.
The French group said the market for its professional products, which include Kerastase and Redken shampoo, had been particularly tough in Western Europe and "not very easy in North America" during the period.
Meanwhile, revenues from luxury cosmetics such as Lancome lipsticks and Biotherm creams suffered in South Korea and Taiwan and decelerated in China but remained dynamic in other emerging markets, it said.
L'Oreal Chief Executive Jean-Paul Agon, however, said the group's luxury products division was holding up well in spite of the global downturn.
He estimated the group's luxury products' sales growth of 9.1 percent in the nine months to September 30 outperformed the overall market whose growth he estimated at 6 percent.
Looking forward, Agon said he saw no reason to believe that the global market's growth should be "very different" next year compared to 2012, for which it forecast sales growth of "around 4 percent."
Agon also said he expected the group's sales growth in the fourth quarter to be "slightly" stronger than during the previous three months.
L'Oreal luxury products, which also include Yves Saint Laurent perfumes and Kiehl's creams, saw their revenue growth slow down to 6.6 percent in the third quarter, down from 8.7 percent in the second quarter and 12.2 percent in the first.
The same pattern was found in L'Oreal's professional products business, which Agon said needed to be "revitalized."
"I think this quarter was a low point," Agon said about the division whose sales growth slowed down to 0.1 percent in the third quarter, from 2.7 percent in the second quarter and 3.1 percent in the first.
"The most notable slowdown was in professional which saw its lowest quarterly growth since 2009," the brokerage Bernstein said in a note.
Overall, L'Oreal's total revenue rose 4.6 percent on a like-for-like basis in the third quarter to 5.519 billion euros ($7.07 billion), which compared with growth of 5.7 percent in the second quarter and 6.4 percent in the first.
WESTERN EUROPE DOWN
L'Oreal Financial Communication Director Thierry Prevot said the group's West European market was "slightly negative at the end of September," mainly because of negative trends in Southern Europe.
Sales from Western Europe were down 0.6 percent in the third quarter against the same period last year on a like-for-like basis but they were up 7.1 percent in North America.
Given L'Oreal shares gained 22 percent so far this year and were weak ahead of Tuesday's trading update, Bernstein said it expected a "muted to slightly negative reaction" of the market on Wednesday.
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