The L'Oreal global flagship store is visible on Nanjing Road on May 8, 2021 in Shanghai, China.
VCG Visual China Group Getty images
The world's largest cosmetic group L'Oreal He said on Friday that he was planning less dependent on the Chinese consumer in terms of growth, instead he focused on growing possibilities on the American market.
“We see the USA as a land of possibilities,” said CEO Nicolas Hieronimus during the presentation of earnings after the company was released Fourth quarter results Thursday.
Speaking of questions and answers during the session, Hieronimus described China as a “great unknown” after the company reported a continuous decline in quarterly sales in North Asia in connection with the “difficult” Chinese ecosystem.
Sales in North Asia fell in the fourth quarter by 3.6%, which is a steep decrease than a 2.4% forecast in a consensus cited by Citi Bank.
By 2024, the increase in the L'Oreal market in continental China dropped by about 4%, and the retail sales of travel in Asia dropped by about 10%, according to the data that the company shared on Friday. The beauty group added that China currently constitutes 17% of total sales, which is a significant reduction in recent years.
“Big unknown is China,” continued Hieronimus. “We settled in our own calculations for the flat market for China. We believe that retail will be difficult and only good surprises can come from there. “
The company, whose brands are Lancôme, Maybelline and Kiehl's, fights with a weaker consumer demand in recent quarters, especially on the key Chinese-Trend market, which also harassed high-class luxury companies.
This is when the sale of the fourth quarter increased in all regions to EUR 11.08 billion (11.49 billion dollars), which is an increase of 2.5% in a similar form and only 11.1 billion euros estimated by analysts in the LSEG poll.
Sales in the US increased by 1.4% in a similar form, compared to a 5.2% increase in the previous quarter and the weakest of all other regions.
Nevertheless, Hieronimus said that he was an optimist about the possibilities on the American market, especially in the young and growing Latin and Wieloracian population, which, he said, would lead to “various new cosmetic needs”.
He also pointed to the wealth of an American consumer who, as he said, “will continue to increase the development of our luxurious division.”
L'Oreal.
“Today we are quite stubborn in the USA, sure of emerging markets, stable at our fortress in Europe and a great question mark in China,” he said.
Hieronimus did not consider the implication of any new US policies around trade and immigration under the administration of President Donald Trump.
Answering a separate question about the potential impact of American tariffs – which can warn the economist flame inflation And they suppress consumers on both US and targeted markets, such as China – Hieronimus said that there were “many unknowns in the macroeconomic environment.
All -year -round L'Oreal sales increased by 5.1% to EUR 43.48 billion compared to the forecast of EUR 43.33 billion, as reported on Thursday.
The shares fell by 4.5% on Friday, when investors set the results, expanding the decrease by over 20% last year.