PARIS: French cosmetics giant L’Oréal SA said Monday its first-quarter sales rose just 1.7% as the strengthening euro curbed higher revenues in emerging markets.
L’Oréal, home to brands including Lancôme, Garnier and Kiehl’s, said sales during the first three months of 2016 totaled €6.55 billion euros (about $7.41 billion), marking a reversal from the fourth quarter of 2015, where it posted 8.5% sales growth in part due to favorable currency conditions.
On a like-for-like basis, which strips out the effects of currency and structural changes, sales grew 4.2%, the company said.
The results highlight how European consumer and retailing companies, which were previously benefiting from a weak euro and strong dollar in 2015, are now negatively impacted by currency volatility. As the euro has since stabilized from last year’s decline against the dollar and has even increased against many other currencies, sales converted from abroad don’t have the same impact they once did.
L’Oréal’s revenue growth during the first quarter was driven by mature markets, continuing a trend from last year.
“North America is confirming its dynamism, Western Europe remains solid and [emerging markets] are proving resilient,” said Chief Executive Jean-Paul Agon.
North American sales grew 5.8%, while Western Europe sales grew 1.3% from last year, the company said.
Sales in its so-called new markets zone, which includes all other regions, declined 0.5%. On a like-for-like basis, however, sales grew 6.1%, underlining the impact of currency fluctuations.
In Asia Pacific, the company said sales increased 2.3% as the strength in China and Southern Asia was hampered by poor sales in Hong Kong.
Meanwhile, L’Oréal reported that its L’Oréal Luxe division—which includes brands such as Yves Saint Laurent, Ralph Lauren and Giorgio Armani—increased 4.4%, the highest increase among its business divisions. L’Oréal’s luxury line fared “particularly strongly in China where it grew twice as fast as the market,” the company said.
