L’Oreal Q4 sales up 6.9% despite decline in North Asia

Cosmetics group L’Oreal reported a 6.9% rise in fourth quarter sales, slower growth than in the previous quarter, as its travel retail business continued to feel the pinch from changes in regulations of daigou resellers.

The Paris-based group, which owns labels ranging from Lancome to Maybelline, said that sales came to 10.6 billion euros ($11.4 billion), just shy of expectations for 10.9 billion euros according to consensus estimates cited by Barclays.

The company’s travel retail business, especially in Hainan and South Korea, has been dented by a crackdown by the Chinese government on resellers known as daigou. The resellers purchase inventory at lower prices in other markets in order to resell them at a discount in the mainland.

Rival Estee Lauder earlier this month announced plans to cut 3% to 5% of its global workforce in a bid to improve margins as Chinese customers cut back on non-essentials.

China’s economy has not rebounded from the Covid-19 crisis as quickly as previously hoped, weighed down by a property crisis and higher youth unemployment.

L’Oreal has fared better than Estee Lauder in China, accounting for the biggest share of the country’s $78.9 billion beauty and personal care market, where its luxury division is the market leader in high end cosmetics.

Sales at Estee Lauder declined 8% overall in the same quarter.

L’Oreal’s operating margin for 2023 stood at 19.8%, in line with expectations.