L'Oreal shares fell around 6% in early trade this morning, set for their worst day since at least October, after the beauty giant missed quarterly sales expectations and reported an unexpected deterioration in its Asian business.
Fourth-quarter sales rose 6%, short of some analyst forecasts of about 7% growth. The Paris-based owner of Maybelline posted quarterly revenue of €11.3 billion, but momentum in North Asia stalled, with sales growing less than expected as travel retail disappointed.
The stock was Europe's second-steepest decliner today.
"I know that you expected more from North Asia given the improving news out of China," finance chief Christophe Babule told analysts, adding the company had seen continued softness in South Korea and a weaker mainland China travel retail market due to changes in domestic airport operators.
L'Oreal had highlighted improving demand for its luxury brands in China in the third quarter.
"The fourth-quarter setup makes it difficult to envision top-line acceleration in full year of 2026," JP Morgan analysts said in a note to clients, adding that while Europe and emerging markets supported performance, they remained cautious on European demand in 2026.
Deutsche Bank Research also said earnings growth was likely to slow in the near term.
L'Oreal said its sales in North Asia, mainly China, grew 0.6% compared to analysts' expectations of 5.6% growth in the world's second biggest beauty market, and after the group posted a 4.7% rise in the region that generates a quarter of its revenues in the prior three months.
The Paris-based owner of Maybelline make-up and Kerastase shampoo said travel retail remained "challenging", though the mainland Chinese market was "gradually stabilising".
Overall sales for the three months to end-December came to €11.3 billion, up 6% on a like-for-like basis, compared to expectations for a 6.3% rise in an analysts' consensus compiled by Visible Alpha.
In recent quarters, consumers in China have been opting for cheaper local brands, cautious shoppers in the US have been curbing spending, while independent brands have been taking market share.
L'Oreal is usually cushioned by its global presence and wide range of products spanning mass market makeup to luxury perfumes and skincare sold in clinics.
Purchases of creams and makeup have picked up in the top cosmetics market of the US, L'Oreal executives previously said.
L'Oreal said its sales in North America rose 8.6% in the fourth quarter, above the Visible Alpha consensus forecast of 7.9%, thanks to new product launches like L'Oreal Paris Plump Ambition lip oil.
L'Oreal launched a 'beauty stimulus' plan last year to speed up bringing new products to market and drive sales. The company has taken market share in conditioners and shampoo as well as face creams, said JP Morgan analysts citing NielsenIQ data earlier this month.
Shares in L'Oreal are up about 7% year to date, while beauty-to-hygiene products maker Unilever is up 10% and smaller peer Beiersdorf has gained 12%.
