Tariffs hit the U.S. market, but China has a "small surprise"; L'Oréal's Q1 same-store sales in North Asia increased by nearly 7% instead of declining | Financial Report Insights

Although the performance in the U.S. market was impacted by tariffs, L'Oréal Group, known as the "king of beauty," managed to withstand the pressure thanks to "surprising" performances in some Asian markets like China. The overall sales slowdown in the first quarter was not as severe as Wall Street had anticipated, with demand for high-end cosmetics and luxury perfumes leading the way in supporting the group's revenue growth. On Thursday, April 17, the France-based L'Oréal Group announced that its sales for the first quarter of 2025 reached €11.73 billion, a year-on-year increase of 4.4%, slowing from last year's growth rate of 5.6%, but still exceeding analysts' expectations of €11.45 billion. Same-store sales grew by 3.5% in the first quarter, also lower than last year's growth of 5.1%, but still better than expected, nearly three times the analysts' expected growth rate of 1.26%. L'Oréal's CEO Nicolas Hieronimus commented on the performance, stating that in a challenging and highly volatile operating environment, the growth at the beginning of the year met the group's expectations, with some good surprises and some unexpected disappointments. The performance in China was slightly better than expected, while the challenges in the U.S. were greater than anticipated. After the earnings report was released, L'Oréal's stock, which had slightly declined, quickly rebounded and rose, reaching a daily high of $81.85 during midday trading, up nearly 7% intraday, and ultimately closing up 5.6%. The financial report showed that L'Oréal's sales growth in its largest market, Europe, significantly slowed compared to last year, with sales in North America turning negative, and the decline in same-store sales far exceeding analysts' expectations. In the North Asia region, including China, not only did sales not continue to decline as analysts had expected, but they also saw significant growth. Among the major markets, only North America experienced a sales decline in the first quarter. L'Oréal stated that the group's performance in the Chinese market is slowly recovering, driven by tourism activities, with sales in Japan and South Korea also increasing. Sales data for the three major markets are as follows: Europe: First quarter sales of €3.915 billion, a year-on-year increase of 4.9%, with same-store sales growth of 4.3%. Last year's full-year sales growth was 9.3%, with same-store sales growth of 8.2%. North America: First quarter sales of €2.973 billion, a year-on-year decrease of 1.4%, with same-store sales down 3.8%, while analysts had expected a decline of 0.64%. Last year's full-year sales growth was 5.9%, with same-store sales growth of 5.5%. North Asia: First quarter sales of €2.953 billion, a year-on-year increase of 8.4%, with same-store sales growth of 6.9%, while analysts had expected a decline of 3.01%. Last year's full-year sales decreased by 3.4%, with same-store sales down 3.2%. Among L'Oréal's four major divisions, only the high-end cosmetics division, including luxury perfumes, saw accelerated growth compared to last year in the first quarter, making it the strongest growth segment, with same-store sales growth five times that of analysts' expectations The sales data for the four major business segments is as follows: Mass Cosmetics: Sales in the first quarter amounted to €4.279 billion, a year-on-year increase of 2.5%, with same-store sales growth of 2.3%. Analysts expected a growth of 1.44%. Last year's total sales growth was 5.3%, with same-store sales growth of 5.4%. Premium Cosmetics: Sales in the first quarter amounted to €4.093 billion, a year-on-year increase of 7.3%, with same-store sales growth of 5.8%. Analysts expected a growth of 1.16%. Last year's total sales growth was 4.5%, with same-store sales growth of 2.7%. Professional Hair Products: Sales in the first quarter amounted to €2.086 billion, a year-on-year increase of 3.5%, with same-store sales growth of 2.7%. Analysts expected a growth of 1.54%. Last year's total sales growth was 9.3%, with same-store sales growth of 9.8%. Dermatological Beauty: Sales in the first quarter amounted to €1.277 billion, a year-on-year increase of 2.7%, with same-store sales growth of 1.6%. Last year's total sales growth was 5.0%, with same-store sales growth of 5.3%.