THE WHAT? L’Oreal reported an increase in third-quarter sales, particularly in Europe and the United States, but experienced a decline in North Asia with sales down by 4.8%.
THE DETAILS The decrease in sales in North Asia was attributed to the Chinese government’s tighter control over daigou resellers, affecting the travel retail business. Despite this, the company expects the impact on margins to be small and manageable, with inventory reductions projected to continue until the end of the year. Sales in mainland China grew by 7.7% over the first nine months, with L’Oreal gaining market share.
THE WHY? L’Oreal’s performance in China is crucial for investors, given the country’s challenging economic conditions post-pandemic. The company remains committed to expanding in China, aiming to increase its presence in lower-tier cities. Meanwhile, L’Oreal’s sales in Europe and North America exceeded expectations, while the global growth of its luxury division slowed down.