As China is disappointed, L’Oreal looks to us as a “land of opportunity”
L’Oreal Global Flagship Store will be found on May 8, 2021 on Nanjing Road, Shanghai, China.
VCG | Visual China Group | Getty Images
The world’s largest beauty group L’Oreal On Friday, it said it plans to reduce China’s dependence on consumers for growth and instead target burgeoning opportunities in the US market.
“We see the United States as a land of opportunity,” CEO Nicholas Hieronymus said during the revenue presentation after the company’s release. Q4 Results Thursday.
During the Q&A session, Hieronymus described China as “big unknown” after reporting a continuous decline in quarterly North Asia sales within the “challenging” Chinese ecosystem.
North Asia sales fell 3.6% on a similar basis in the fourth quarter, a steeper decline than the 2.4% contraction forecast cited by Citi Bank.
Until 2024, L’Oreal’s market growth in mainland China fell by about 4%, but travel retail in Asia fell by about 10%, according to data shared on Friday. The beauty group added that China currently accounts for 17% of total sales. This has been a noticeable reduction in recent years.
“The big unknown is China,” continued Hieronymus. “We explained it in our own calculations of China’s flat market. Travel retail remains difficult, and I think only good surprises come from there.”
The company, which includes brands such as Lancome, Maybelline and Kiehl’s, has struggled with weak consumer demand over the recent quarter, especially in major markets in the Chinese market.
Fourth quarter sales increased in all regions, up 2.5% to 11.08 billion euros ($114.9 billion), slightly shy of the 11.1 billion euros estimated by analysts in the LSEG polls Masu.
US sales rose 1.4% on a similar basis, down from the weakest growth of all other regions with 5.2% growth in the last quarter.
Nevertheless, Hieronymus said he was optimistic about the opportunities in the US market, particularly in young and growing Latino and multiethnic groups, leading to “a variety of new beauty needs.”
He also pointed to the abundance of US consumers, saying it “continues to drive growth in our luxury sector.”
L’Oreal.
“Today, we are quite bullish in the US, confident in emerging markets, and steadily have a big question mark in Europe and China,” he said.
Hieronymus did not weigh the implications of new US policies regarding trade and immigration under President Donald Trump’s administration.
Answer another question about the potential impact of US tariffs – Warn that economists can Flame inflation It also curbs consumer spending in both target markets such as the US and China. Hieronymus said there are “many unknowns” in the macroeconomic environment.
L’Oreal’s full-year sales rose 5.1% to EUR 43.33 billion, the company reported Thursday.
Shares fell 3.5% on Friday as investors digested the results and fell more than 20% last year.