UPDATE 2-L'Oreal Q2 sales growth slightly below forecasts

Tue Jul 16, 2013 2:10pm EDT

Related Topics

* Q2 sales growth 5.2 pct vs forecast 5.5 pct

* L'Oreal says trading at hair salon product unit improving

* U.S. growth slows (Adds detail, analyst comment)

By Astrid Wendlandt

PARIS, July 16 (Reuters) - L'Oreal's sales grew slightly less than expected in the second quarter but the world's biggest cosmetics group pointed to improved trading at its underperforming hair salon products business.

Quarterly sales rose 5.2 percent on a like-for-like basis from the same period a year earlier, the company said on Tuesday.

Analysts had expected the maker of Garnier shampoo and Yves Saint Laurent perfume to report growth of around 5.5 percent, roughly in line with the previous three months.

"L'Oreal came in slightly below expectations," Bernstein analyst Andrew Wood said in a note. "We expect slight disappointment from the market, especially given the strong year-to-date momentum in the stock."

L'Oreal shares, which closed 1.5 percent lower on Tuesday, have gained nearly 25 percent since the start of the year.

The group said its professional hair salon products unit had suffered, particularly in southern Europe, but still achieved sales growth of 2.7 percent on a comparable basis in the quarter to June 30, compared to no growth in the first quarter.

"It seems professional products have turned the corner," L'Oreal Chief Executive Jean-Paul Agon told analysts on a conference call.

L'Oreal's luxury products, which include Armani perfume and Lancome creams, saw growth slow to 5.5 percent on a like-for-like basis from 7.2 percent in the first quarter.

From a regional perspective, comparable sales growth remained stable in Western Europe at 1.7 percent but decelerated in North America to 4.5 percent from 6.3 percent.

"Regarding the U.S. market, we have seen a clear deceleration compared to last year," Agon said.

In its newer markets, the company saw higher growth rates in the Asia-Pacific region and Latin America but more subdued demand in Eastern Europe.

Agon said bad weather during the three months through June had also hit sales, cutting orders of slimming products by a quarter and sun care products by about 7-10 percent.

He said he expected trends in the global cosmetics market to remain unchanged during the rest of the year. The group reiterated its target to expand profits and sales in 2013. (Editing by James Regan and Tom Pfeiffer)

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