L'Oreal Q3 sales beat forecasts as China demand picks up

L'Oreal Beats Q3 Sales Forecasts Amid Surging China and Luxury Market Demand

Strong Third-Quarter Performance Driven by Global Demand and Innovation

By Dominique Patton

PARIS, Oct 22 (Reuters) - French cosmetics group L'Oreal beat third-quarter sales forecasts on Thursday, boosted by demand for luxury perfumes, skincare and hair products, particularly in China and emerging markets.

Financial Highlights and Analyst Expectations

The maker of CeraVe moisturiser and Prada perfumes said sales from July to September rose 7.7% on an adjusted like-for-like basis to €11.56 billion ($12.95 billion), topping analysts' consensus forecast for 5.9% growth in a Visible Alpha poll.

CEO Statement and Market Resilience

"The global beauty market, once again, proved its resilience in a challenging context — and we continued to significantly outpace it," CEO Nicolas Hieronimus said in a statement.

Market Trends and Consumer Behavior

The "Lipstick Effect" and Sector Growth

 Beauty has been a bright spot in an otherwise sluggish consumer goods sector, with some analysts and executives pointing to the "lipstick effect" of consumers treating themselves to affordable luxuries during challenging times.

Product Innovation and Online Sales

Growth has also been supported by product innovation and booming online sales channels.

Skincare and Targeted Product Lines

L'Oreal stepped up innovation after growth slowed last year, particularly in its important skincare category. New premium Kerastase shampoos and La Roche-Posay sunscreen and serums have been among its fastest-growing lines as consumers seek more targeted beauty products.

Addressing New Consumer Needs

The company is also targeting consumers using GLP-1 weight-loss drugs, promoting products aimed at addressing secondary effects such as sagging facial skin.

Regional Performance and Luxury Division Growth

Luxury Division Outpaces Forecasts

L'Oreal's luxury division, which generates more than a third of group revenue, grew 7% on a like-for-like basis, well ahead of a 4.5% forecast. The performance was driven by strong demand for fragrances including Prada Paradigme and by accelerating sales growth in China.

China and Emerging Markets Recovery

China's beauty market has been expanding again after two years of contraction, as middle-class consumers shift spending from entry-level luxury goods towards prestige beauty products.

European and Middle Eastern Growth

Sales in Europe, L'Oreal's biggest market, rose nearly 9%, while revenue in South Asia and the Middle East jumped 19.5% on strong demand in Gulf countries and Vietnam.

Share Performance and Closing Notes

Shares in L'Oreal, France's most valuable listed company, are up 11% this year.

($1 = 0.8927 euros)

(Reporting by Dominique Patton. Editing by Mark Potter)