PARIS (Reuters) – Sales at Maybelline maker L’Oreal <OREP.PA> fell more sharply than expected in the second quarter, though the French beauty group managed to contain any major profit erosion as the COVID-19 pandemic forced stores to close.
The company, which also makes Lancome creams and make-up for brands such as Armani, sounded a more optimistic note for the second half of the year, saying it was planning product launches and was determined to “find again the path to growth”.
In China, its biggest market, and where lockdown measures were eased several months ago, comparable revenue was up 30% in the April to June period, it added.
Coronavirus lockdowns hit retailers and luxury manufacturers hard as the outbreak spread from Asia to Europe and the United States. L’Oreal sells many of its products in airports, which were also paralysed as tourist numbers dried up.
The group was hurt by the closure of hairdressing salons too, and sales of professional products tumbled more than those of other divisions.
However, online sales surged, L’Oreal added, with demand for hair tints for home use soaring, for example.
But overall revenue came in at 5.85 billion euros ($6.90 billion) in April-June, down 18.8% on a like-for-like basis, which strips out currency effects and acquisitions.
Analysts had on average expected a 13.1% like-for-like sales drop, according to a consensus forecast cited by Berenberg.
L’Oreal’s operating margins stood at 18% at the end of the first half of the year, only slightly down from 18.6% at the end of 2019, and it cut expenses in areas such as advertising.
The group posted a net profit of 2.14 billion euros for the January to June period, down from 2.47 billion euros a year earlier.
L’Oreal is due to hold a conference call with analysts on Friday.
(Reporting by Sarah White and Sudip Kar-Gupta; Editing by Mark Potter and David Evans)
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