The French beauty giant L’Oreal reported steady growth in the fourth quarter, but the company said its overall momentum has slowed because of strong competition and weaker demand in some key markets. L’Oreal, which owns popular brands such as Maybelline and Kérastase, said sales for the three months to the end of December reached €11.3 billion, showing a 6% increase on a like-for-like basis.

Strong demand in Europe and North America

Sales performed well in Europe and North America, supported by strong demand for hair-care products and perfumes.

In North America, sales rose 8.6% in the fourth quarter. The company said new product launches and strong Black Friday shopping helped drive growth.

North Asia remains weak

Performance in North Asia was much softer. Sales increased by only 0.6%, far below expectations.

L’Oreal said travel retail remains challenging, while the mainland Chinese market is only gradually stabilizing. Many customers in China are now choosing cheaper local beauty brands.

Competition and cautious consumers

Although L’Oreal usually performs better than many rivals because of its wide range of products and global reach, growth has slowed in recent quarters.

The company faces:

• rising competition from independent beauty brands,
• more cautious spending by shoppers in the US, and
• Stronger local competitors in China.

New strategy to boost growth

To support sales, L’Oreal launched a “beauty stimulus” plan to speed up new product development and improve time-to-market.

Analysts at JP Morgan, citing data from Nielsen, said L’Oreal has been gaining market share in shampoos, conditioners and face creams.

So far this year, L’Oreal shares are up around 7%.
By comparison, Unilever has gained about 10%, while Beiersdorf is up roughly 12%.

New leadership in the Americas

L’Oreal also announced a management change.
Alexis Perakis-Valat will become chief executive for the Americas, replacing David Greenberg, who will take on the role of US chairman.