---
title: "L'Oreal's sales slowed in the second quarter, with a decline of over 2% in North Asia, including China, falling short of expectations｜Financial Report Insights"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/210250776.md"
description: "In the second quarter, L'Oreal's same-store sales growth was 5.3%, slowing down from the 9.4% growth in the first quarter, exceeding expectations. Same-store sales in the North Asia region, including China, declined by 2.4%, approximately four times the analysts' expectations. L'Oreal stated that the Chinese beauty market experienced negative growth in the second quarter, influenced by high base numbers and consumer confidence. Following the financial report, L'Oreal's stock in the US quickly expanded its decline to nearly 3%, but rebounded during midday trading"
datetime: "2024-07-30T21:38:12.000Z"
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  - [en](https://longbridge.com/en/news/210250776.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/210250776.md)
---

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# L'Oreal's sales slowed in the second quarter, with a decline of over 2% in North Asia, including China, falling short of expectations｜Financial Report Insights

Just like the overseas luxury brands that recently announced their financial reports, the world's largest beauty conglomerate L'Oréal SA is also facing challenges in the Chinese market with poor performance. Due to weak sales in major Asian markets such as China, L'Oréal's growth slowed in the second quarter.

On Tuesday, July 30th, local time, the L'Oréal Group, headquartered in France, released its financial data for the first half of this year, including the second quarter. The growth reported in L'Oréal's previous Chinese financial report is based on comparable structure and constant exchange rates for same-store sales, referred to as same-store sales below.

**1) Key Financial Data**

> **Sales**: Sales for the first half of the year amounted to 22.12 billion euros, a year-on-year increase of 7.5%, with same-store sales growth of 7.3%. The second quarter sales were approximately 10.88 billion euros, a year-on-year increase of 6.7%, with same-store sales growth of 5.3%. Analysts expected 10.77 billion euros in sales and a same-store sales growth of 6.02%.
> 
> **Operating Profit**: Operating profit for the first half of the year was around 4.6 billion euros, an 8% year-on-year increase. Analysts expected 4.56 billion euros. The operating profit margin was 28.8%, a 10 percentage point increase year-on-year.
> 
> **Net Profit**: Net profit after deducting minority shareholder interests for the first half of the year was approximately 3.656 billion euros, an 8.8% year-on-year increase.
> 
> **EPS**: Earnings per share (EPS) for the first half of the year were 6.98 euros, a 3.7% year-on-year increase.

**2) Sales by Division**

> **Consumer Products**: Sales for the Consumer Products division in the first half of the year were 8.322 billion euros, an 8.3% year-on-year increase, with same-store sales growth of 8.9%. The second quarter sales were 4.149 billion euros, a 7.3% year-on-year increase, with same-store sales growth of 6.7%.
> 
> **Luxury Products**: Sales for the Luxury Products division in the first half of the year were 7.579 billion euros, a 4% year-on-year increase, with same-store sales growth of 2.3%. The second quarter sales were 3.766 billion euros, a 5.8% year-on-year increase, with same-store sales growth of 2.8%.
> 
> **Active Cosmetics**: Sales for the Active Cosmetics division in the first half of the year were 3.793 billion euros, a 15.5% year-on-year increase, with same-store sales growth of 16.4%. The second quarter sales were 1.777 billion euros, an 11.1% year-on-year increase, with same-store sales growth of 10.8%.
> 
> **Professional Products**: Sales for the Professional Products division in the first half of the year were 2.427 billion euros, a 4.9% year-on-year increase, with same-store sales growth of 5.7%. The second quarter sales were 1.183 billion euros, a 1.1% year-on-year increase, with same-store sales growth of 0.9%.

**3) Sales by Geographic Region**

> **Europe**: Sales in Europe for the first half of the year were 7.283 billion euros, a 12.2% year-on-year increase, with same-store sales growth of 11.1%. Second quarter sales were 3.55 billion euros, a 12.2% year-on-year increase, with same-store sales growth of 9.7%
> 
> **North America**: Sales in North America in the first half of the year amounted to 5.799 billion euros, an increase of 8.7% year-on-year, with same-store sales growing by 7.8%. Sales in the second quarter reached 2.784 billion euros, up 5.5% year-on-year, with same-store sales increasing by 3.4%.
> 
> **North Asia**: Sales in North Asia in the first half of the year totaled 5.475 billion euros, a decrease of 3.1% year-on-year, with same-store sales declining by 1.7%. Second-quarter sales were 2.752 billion euros, down 2.4% year-on-year, with same-store sales sliding by 2.4%, while analysts expected a decrease of 0.62%.
> 
> **Southern Asia Pacific, Middle East, North Africa, Sub-Saharan Africa**: Sales in the Southern Asia Pacific, Middle East, North Africa, and Sub-Saharan Africa in the first half of the year amounted to 1.884 billion euros, an increase of 14.3% year-on-year, with same-store sales growing by 15.2%. Sales in the second quarter were 922.5 million euros, up 14.3% year-on-year, with same-store sales increasing by 14%.
> 
> **Latin America**: Sales in Latin America in the first half of the year reached 1.68 billion euros, an increase of 15.8% year-on-year, with same-store sales growing by 14.2%. Second-quarter sales were 867.6 million euros, up 13.3% year-on-year, with same-store sales increasing by 12.3%.
> 
> After the financial report was released, L'Oreal's U.S. stocks opened lower on Tuesday, with the intraday decline rapidly expanding. In about 5 minutes, it hit a daily low of $82.81, with the intraday decline widening from less than 0.8% to over 2.8%. Subsequently, the decline was gradually erased, turning positive at midday and closing up nearly 1.3%.
> 
> > 
> ## Second-quarter same-store sales slow down more than expected, performance of the Chinese beauty market affected by high base and consumer confidence
> 
> In the second quarter, L'Oreal's same-store sales not only slowed down significantly from the first quarter's growth of 9.4%, but also exceeded analysts' expectations. The sales of dermatological beauty businesses including La Roche-Posay and CeraVe maintained double-digit growth in the second quarter, but the growth rate was lower than analysts' expectations.
> 
> L'Oreal CEO Nicolas Hieronimus commented on the financial report data for the first half of the year, stating that L'Oreal continued to show strong development momentum in emerging markets, Europe, and North America, which was enough to offset the downturn in the beauty market in mainland China and the adverse impact on travel retail.
> 
> The financial report shows that same-store sales in North Asia, including China, accelerated in the second quarter compared to the first quarter, with a year-on-year decline more than twice that of the first quarter at 1.1%, about four times the analysts' expected decline in the second quarter. In other regions, L'Oreal's sales were all positive, with same-store sales in the largest market, Europe, approaching 10%.
> 
> When introducing the performance of the North Asia market in the first half of the year, L'Oreal pointed out that in mainland China, the performance of the beauty market in the second quarter experienced negative growth due to the high base in the same period last year and exacerbated by the continued low consumer confidence.
> 
> Last month, L'Oreal CEO Hieronimus warned investors at a public event that the global beauty market is expected to grow by 4.5% to 5% this year, lower than L'Oreal's previous expectation of 5%, as the growth engine of L'Oreal's performance in previous years—the Chinese market, after years of rapid sales growth, is expected to perform averagely this year.

Wall Street News once mentioned that due to the "defeat" in the Chinese market this year, European luxury brands that announced their financial reports in the past two weeks have either experienced a slowdown or a decline in sales growth.

Two weeks ago, Swiss fashion watch manufacturer Swatch announced a sharp 70% decrease in net profit for the first half of the year, attributing it to the decline in luxury goods demand in the Chinese market; British Burberry expects to incur an operating loss in the first half of this year, with full-year operating profit below guidance, while German Hugo Boss has lowered its sales and profit guidance for this year due to weak consumer demand in China and other regions worldwide; Swiss Richemont saw a slight 1% increase in sales in the first quarter, but sales in the Greater China region dropped by 27%.

Last Tuesday, the world's largest luxury goods group LVMH announced that organic sales growth in the second quarter slowed to 1%, falling short of expectations. While organic sales in Europe, America, and Japan all increased, sales in Asia excluding Japan, including China, declined by 14%, partially offsetting the strong overseas consumption by Chinese tourists. Last Wednesday, LVMH's long-time rival Kering announced an 11% year-on-year decline in revenue for the first half of the year, with revenue in the Asia-Pacific region outside Japan dropping by 22%.

Last Thursday, Hermès announced that second-quarter revenue exceeded expectations with a 13% growth. Customer traffic in the Greater China region declined during the quarter, while revenue in the Asia-Pacific region outside Japan increased by 5.5%, less than half of the first quarter's growth rate but still higher than analysts' expectations, making it a "star performer" for overseas luxury brands in the Chinese market

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