Investing.com – Analysts at Evercore highlighted L’Oreal’s (EPA:) decision to revise its global cosmetics market growth forecast from 5.0% to a range of 4.5-5.0%. The revision comes in response to market volatility in China and a “slightly negative” shopping festival on 6.18.
L’Oréal shares fell following the announcement from CEO Nicolas Hieronimus. The development is in line with Evercore’s forecast for a decline in cosmetics sales in China in June due to timing issues and consumer sentiment.
Although net sales fell during the 6.18 shopping festival in China, L’Oréal’s overall sales rose, indicating a rise in promotional activities.
In the U.S., L’Oréal’s growth is slowing due to declining mass beauty sales. However, premium fragrances continue to perform strongly. According to Circana, which includes Ulta Beauty (NASDAQ:) for mass products, L’Oréal-U.S. growth is expected to be 2%, slightly lower than in the first quarter of 2024.
However, reported sales grew 11% due to timing of shipments and stronger sales of the luxury and professional segments.
L’Oréal continues to excel in the luxury segment in the United States, especially in fragrances and cosmetics. This is partly due to L’Oréal launching Lancôme and other luxury brands on Amazon (NASDAQ:) Premium, which is now the largest beauty retailer in the United States.
Analysts expect a 5.8% like-for-like sales increase in the second quarter, driven by a 9.7% rebound in luxury products after two quarters of +2-3%, reflecting lower inventory in Hainan.
Despite some expected slowdown, Evercore maintains a more conservative 4.9% forecast.