Investing.com - Analysts at Evercore highlighted L’Oreal's (EPA:OREP) decision to revise its global beauty market growth forecast from 5.0% to a range of 4.5-5.0%. This adjustment comes in response to market volatility in China and a "slightly negative" 6.18 shopping festival.
L'Oreal's stock has experienced a dip following the announcement by CEO Nicolas Hieronimus. This development aligns with Evercore's anticipation of a pullback in China's beauty sales for June due to timing and consumer sentiment issues.
Despite the downtick in net sales during China's 6.18 shopping festival, gross sales for L'Oreal have reportedly increased, indicating an uptick in promotional activities.
In the US, L'Oreal's growth is slowing due to a decline in mass makeup sales. However, prestige fragrances continue to perform strongly. According to Circana data, which includes Ulta Beauty (NASDAQ:ULTA) for mass products, L'Oreal-USA's growth is pegged at 2%, slightly lower than in the first quarter of 2024.
Reported sales, however, grew by 11% due to the timing of shipments and stronger sales for the Luxury and Professional divisions.
L'Oreal continues to outperform in the US prestige segment, particularly in fragrances and makeup. This is in part due to L'Oreal launching Lancôme and other prestige brands on Amazon (NASDAQ:AMZN) Premium, which is now the largest beauty retailer in the US.
Analysts predict a 5.8% like-for-like sales increase in the second quarter, driven by a 9.7% rebound in Luxury after two quarters of +2-3%, reflecting Hainan destocking.
Despite some anticipated deceleration, Evercore maintains a more conservative forecast of 4.9%.
This content was originally published on Investing.com
