L'Oréal sales slip in Q2 as North Asia and travel retail lag
Quarterly revenue fell by 1.3% year-over-year to €10.73 billion ($11.7 billion), the company said Tuesday evening. The drop was steeper than analysts had expected, and revenue in North Asia—particularly China and South Korea—saw a significant decline that gains in other global markets could not fully offset.
On a like-for-like basis, which excludes currency fluctuations and acquisitions or divestments, group sales rose 2.4%, falling short of the 2.9% growth projected in a Visible Alpha consensus estimate cited by Jefferies. Total revenue for the April–June period reached €10.74 billion ($12.38 billion). Adjusted for the phased rollout of a new IT system, underlying growth stood at 3.7%, according to the company.
L'Oréal is facing sluggish consumer spending in China due to stagnant wage growth, high youth unemployment, and continued uncertainty surrounding former U.S. President Donald Trump 's tariff policies. Demand in Asian travel retail channels also remained weak.
Global cosmetics market growth has slowed significantly in recent quarters from the highs of the post-pandemic rebound, when inflation drove up sales values. The sector—especially the fragrance category, which is predominantly produced in Europe—is also grappling with rising costs tied to tariffs.
In response to the European Union's recent agreement to impose a 15% tariff on U.S. imports of EU cosmetics, L'Oréal CEO Nicolas Hieronimus voiced concern and revealed plans to lobby for an exemption. 'I don't think it's a good deal,' he told Reuters. 'We're going to be writing to all the European leaders and negotiators to see whether there's a loophole we could benefit from, because ultimately, this could prove costly.'
L'Oréal, which imports around 30% of its U.S. sales, may raise prices and shift more production to its four American factories. However, Hieronimus said the group is holding off on any decisions until further negotiations between the U.S. and other nations are finalized.
While analysts at Jefferies expect U.S. perfume sales to slow in the second half as companies raise prices, Hieronimus noted that L'Oréal's fragrance segment is currently growing at double-digit rates, compared to 7% for the broader market. 'There is some pricing power on fragrances, but we also have to consider how sensitive demand is to price changes,' he added.
Following the earnings release, L'Oréal shares fell by around 1% in after-hours trading on the Tradegate platform.
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