L’Oréal said first quarter 2025 sales rose 3.5 per cent like-for-like to €11.7 billion in line with analysts’ estimates, amid the current economic and geopolitical tensions. Shares were slightly up on Thursday afternoon.
“In what has been a particularly challenging and volatile operating environment, L’Oréal has started the year with growth in line with our projections. There were some good and some less good surprises: the US was more challenging than anticipated, while China was slightly better than expected. Europe was, once again, our single largest growth contributor, and emerging markets remained dynamic,” said L’Oréal’s CEO, Nicolas Hieronimus, in a statement.
North America sales were down 3.8 per cent year-over-year, missing the group’s expectations. Hieronimus chalked this up to the tariff turmoil impacting consumer sentiment. The Luxe category continued to be the strongest category in the region, fuelled by fragrance and key contributions from Yves Saint Laurent’s Libre and Myslf, Valentino’s Born in Roma.
Asia saw a slight bounceback, with sales up 6.9 per cent. Tourist sales in Japan and Korea were strong, while mainland China showed signs of recovery, but conditions remain challenging in travel retail, where sales continue to decline.
“The American market has been slower than expected, and even China has been a bit better than expected, getting to flattish growth when it was mid-single-digit negative in Q4 of last year — it’s not exactly what we hoped for,” Hieronimus told investors on Thursday’s earnings call.
In Europe, sales were up 4.3 per cent with growth driven by Spain, Portugal, Italy and the UK and Ireland. Sales grew 7.9 per cent in Latin America, led by Brazil, showing double-digit growth, while Mexico was hampered due to US tariffs.
“In the current context, our priorities are to drive growth and manage our [profit and loss] to offset the impact of tariff hikes, with the benefit of an already very healthy gross margin. We will, of course, continue to put the right fuel behind our 37 international brands to further reinforce our global leadership,” Hieronimus said.
By division, Luxe (including brands such as Yves Saint Laurent and Valentino) led sales growth, up 5.8 per cent like-for-like. All categories grew within the division, with double-digit growth from fragrance. In terms of newness on the horizon, Hieronimus called out the imminent debut of Miu Miu’s first fragrance. Luxe-brand cosmetics sales were also up by double-digits, led by Valentino and Prada, with new launches from Yves Saint Laurent (Make Me Blush and The Inks cream lipsticks) off to a strong start, the company said.
Dermatological beauty was up 2.7 per cent, led by skincare brand La Roche-Posay. Consumer products (brands like Garnier and Nyx) were up 2.3 per cent. Professional products (led by premium haircare and brands Kérastase and L’Oréal Professionnel), up 1.6 per cent, “are off to an excellent start”, the company said.
The group doesn’t break out growth by product category, but chief financial officer Christophe Babule told investors that haircare grew in the mid-to-high single digits, fragrance to mid-teens, while makeup and skincare were up in the low single digits. “Globally, across all markets, fragrance and haircare remain our two best-performing categories, and our makeup stimulus plan is starting to bear fruit in a market that’s unfortunately subdued as consumer spending softens,” he said.
Tariffs: The evolving plan of action
Despite a better-than-expected performance, Hieronimus warns of the chaotic tariff turmoil’s effect on sales. “There are several ways to mitigate tariff impacts,” he says, “One is price increases because the categories within the luxury sector have more pricing power. We have built up inventory, and yes, we can relocate some of our production.”
“Even though the magnitude [of the tariffs] was higher than expected, we built out some inventory with our luxury brands before the tariffs unfolded,” Hieronimus says. As a result, he doesn’t expect a hit on margin impact to unfold until the second half of the year. However, Hieronimus says the group continues to watch the changes carefully. “We’re watching what’s happening and trying to figure out the end game and then, if according to what is decided and actioned [in terms of tariff hikes], we can take on relocation measures,” he says.
Looking ahead, “Most of our hope lies in the second half of the year, but there are no certainties. It’s very hard to predict what the impact of this international turmoil and tariff wars on consumption itself will be,” concluded Hieronimus.
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