Shares in L’Oréal fell sharply on the Paris market on Friday after the cosmetics giant reported sales below analysts’ expectations, fuelling worries about softness in its luxury portfolio and continued weakness in China.
Although revenue in Europe—still the company’s largest market—rose by seven per cent in the fourth quarter, growth slowed to just 0.7 per cent in North America and dropped five per cent in North Asia, which includes China.
Overall, fourth-quarter sales increased by 1.5 per cent to €11.2 billion, a period that typically benefits from strong holiday demand. This marked a significant deceleration from the 4.5 per cent growth recorded a year earlier.
On a like-for-like basis that strips out currency effects, sales rose six per cent, falling short of the roughly eight per cent growth analysts had forecast.
The luxury division, L’Oréal Luxe—the group’s largest by revenue and home to high-end perfumes and make-up—posted a 0.5 per cent decline in quarterly sales to €4.2 billion.
“We think the miss, driven by North Asia and Luxe, will concern investors given the uncertain outlook,” said David Hayes, an analyst at Jefferies.
L’Oréal shares dropped as much as six per cent at the open before trimming losses to trade about 3.2 per cent lower later in the morning.
For the full year, net profit fell 4.4 per cent to €6.1 billion.
Presenting the results on Thursday, chief executive Nicolas Hieronimus said the company delivered a “solid” performance despite what he described as a “volatile and unfavourable” environment.
Looking ahead to 2026, he urged caution, saying the group needed to be “humble”, even as he expected the global beauty market to continue growing barring any fresh shocks.
“We will have to step up our efforts on innovation to energise the market and win over consumers,” he added.