French cosmetics giant L’Oreal announced Wednesday that its first-quarter revenue jumped 6.7% as consumers flocked to premium hair care products and fragrances, with particularly strong performance in North America and developing markets helping to counterbalance sluggish sales in the Middle East.
The company behind popular brands like Kerastase shampoo and YSL Libre perfume reported quarterly revenue of 12.2 billion euros ($14.32 billion) for the period ending in March. The growth figure reflects adjustments made for inventory issues from both this year and last year’s first quarter, related to an ongoing technology system upgrade.
RBC analysts praised the results, stating “L’Oreal has returned to form,” highlighting the company’s solid fundamental growth and improved performance compared to the previous quarter.
As the world’s leading beauty company, L’Oreal typically surpasses broader industry performance by utilizing its diverse product range – from affordable L’Oreal Paris cosmetics to luxury fragrances and dermatologist-recommended skincare – to capitalize on changing consumer preferences.
The company acknowledged that Middle Eastern demand has suffered due to the U.S.-Israeli conflict with Iran, with particular impact in the UAE. However, this was offset by double-digit expansion in other developing regions and a 7.6% sales increase in North America, which ranks as the company’s second-largest market after Europe.
Chief Executive Nicolas Hieronimus expressed confidence despite current challenges, saying in a statement: “Despite current geopolitical and macroeconomic uncertainties, we are optimistic about the outlook for the global beauty market.”
This positive outlook contrasts with more reserved reports from other companies worried about Middle Eastern conflict impacts. Luxury conglomerates LVMH, Hermes and Kering all attributed disappointing first-quarter results to regional tensions, while businesses across various industries have cited war-related cost increases, supply chain disruptions and weakened consumer confidence as concerns for future performance.
Barclays analysts noted in an April 17 research report that “L’Oreal screens as a relative winner thanks to its strong exposure to mass beauty, where products remain affordable and consumers can trade down within the portfolio.”
The analysts estimated that Middle Eastern markets represent only 2%-3% of L’Oreal’s total revenue, including airport and travel retail sales.
The company reported that its broader region encompassing South Asia, the Middle East and Africa – which accounted for 9% of total sales last year – achieved 15% growth, while European sales increased 5.5%.
L’Oreal also noted that Chinese sales expanded by mid-to-high single digits, boosted by strong luxury product performance.
