Updated Oct. 19 4:10 p.m.

PARIS – L’Oréal’s third-quarter sales grew 4.5 percent in reported terms, dampened by travel retail Asia, but bolstered by business within the group’s Dermatological Beauty and Consumer Products divisions.

Total sales for the maker of Lancôme, Kiehl’s and CeraVe products within the three months ended Sept. 30 got here to 10 billion euros, up 11.1 percent on a like-for-like basis, consistent with analysts’ consensus.

“Being in line just isn’t something we often write about L’Oréal,” wrote Bruno Monteyne, a Bernstein analyst in a note Thursday evening, after the Paris bourse closed and L’Oréal published its results.

Monteyne highlighted how L’Oréal’s travel retail business dragged the group’s sales in North Asia down sequentially from plus 5.9 percent within the second quarter to minus 4.8 percent – against consensus of up 15 percent – within the third quarter of 2023, and that it resulted in a slowdown within the L’Oréal Luxe division, which posted a sales decline of three.2 percent.

“While that may be a drag, all other divisions and regions made up for this material drag,” he wrote.

Molly Wylenzek, an analyst at Jeffries, underlined L’Oréal Luxe’s organic sales growth of three.2 percent – against 12.2 percent consensus – to three.5 billion euros.

“While some slowing may need been expected in light of a small miss from LVMH’s perfume and cosmetics division (to which Luxe has been well-correlated) last week, we expect this can come as a negative surprise to the market,” she wrote.

L’Oréal’s strongest beats were made by its Dermatological Beauty and Consumer Products divisions.

Dermatological Beauty’s sales within the third quarter were 1.62 billion euros, up 28.1 percent on a like-for-like basis, while consensus was 18.5 percent. Meanwhile, the Consumer Products division’s sales got here in at 3.77 billion euros, representing organic growth of 13.4 percent, versus consensus’ 8.5 percent.

And the Skilled Products division’s organic sales advanced 8.7 percent to 1.11 billion euros.

Nine-month sales at L’Oréal increased 9.4 percent in reported terms to 30.58 billion euros. On a like-for-like basis, they were up 12.6 percent.

L’Oréal estimates the general beauty market has been growing by 9 percent up to now in 2023.

Nicolas Hieronimus, chief executive officer of L’Oréal, said during a call with analysts and journalists Thursday evening that the corporate has the capability to outperform the market, and to compensate or offset temporary pockets of weakness, due to the prolonged footprint of the group’s regions and divisions, in addition to its agility to reallocate resources.

Many questions surfaced about China, from which Hieronimus had just returned. He noted how people say it’s been slow to recuperate, flattish after nine months.

“But L’Oréal continues to outperform,” said Hieronimus. “That’s the results of a fantastic online activity, good offline comeback available on the market, where consumers are still a bit shy of their spending. We’re achieving record shares.”

Concerning travel retail in China, the chief pointed to a latest consumption paradigm following the remaining of Chinese governmental policies regarding the channel, including a crackdown on daigou, the informal cross-border market trade involving people buying products abroad to then resell them in China at the next price.

“We’ve inventory to scale back,” said Hieronimus adding that has been a spotlight over the summer.

“We’ve actually gained a bit of little bit of share in sell-out, nevertheless it’s in a lower-sell-out.”

He said the problems L’Oréal has with travel retail are circumscribed, limited to travel retail Asia – particularly the Chinese island of Hainan, and Korea – and temporary. Hieronimus expects the group’s inventory reduction to proceed within the channel through year-end.

He reiterated L’Oréal’s high ambitions for China, where the corporate’s brands are usually not yet wholly distributed.

The manager said the market stays very dynamic in North America, where L’Oréal sales grew 12.6 percent in the primary nine months of 2023. That was particularly bolstered by makeup and fragrances, categories growing by double-digits, and good contributions from skin and hair care.

He said within the zone all 4 divisions had strong performances, with Dermatological Beauty within the high 20’s, Luxe within the mid-teens, Consumer Products within the high-single digits and Skilled Products in mid-single digits sales-growth-wise.

Lancôme’s success on Amazon within the U.S. was lauded.

“It’s a fantastic start,” said Hieronimus. “What’s interesting is it’s particularly good on makeup.”

He described the Lancôme team as having created a shopping experience on the platform worthy of the brand equity.

“Regarding consumers, we see that the primary numbers are that around 75 percent are latest to the brand,” said Hieronimus, adding: “Through a latest distribution channel, with a brand that’s already quite well-known, you may truly reach latest consumers and increase your penetration. So it’s excellent news.”

An issue was raised about ambitions for Aesop, the Australian luxury beauty brand L’Oréal began operating six weeks ago, including when EBIT margin is likely to be consistent with the remaining of the brands in L’Oréal Luxe.

Hieronimus said that in September, Aesop posted strong top-line growth of greater than 17 percent.

“China is the number-one growth opportunity for Aesop,” he said. “It’s the very starting.”

Regarding profitability, and based on the numbers L’Oréal has which can be being fine-tuned, Hieronimus said: “We all know that Aesop can have a 25 basis-points dilution effect on a 12-month rolling period for the group.

“Overall, although the target can be to progressively improve its profitability, we must not forget that as [Aesop] is a retail brand, the profitability is calculated on consumer priced numbers, not on wholesale prices,” Hieronimus said. “But considering the expansion potential, I believe it’s going to be very helpful to the earnings per share of L’Oréal within the years to come back.”

Initially of the decision, it was announced that Eva Quiroga, currently deputy director investor relations at L’Oréal, will step into the role of director of investor relations at year-end. She is to succeed Françoise Lauvin after 14 years within the position. Analysts prolonged their many due to Lauvin for her longstanding help.

Also on Thursday, L’Oréal said it will stop commercializing Decléor, a French beauty brand it acquired in 2014.