L’Oreal’s fourth-quarter sales increased 6.9 per cent, slower than the previous quarter, as its travel retail division continued to suffer from changes in daigou reseller laws.
The Paris-based firm, which owns brands ranging from Lancome to Maybelline, reported sales of 10.6 billion euros (USD 11.4 billion), slightly lower than average predictions of 10.9 billion euros given by Barclays.
The company’s travel retail sector, particularly in Hainan and South Korea, has been harmed by the Chinese government’s crackdown on resellers known as daigou. Resellers buy products at reduced rates in other markets and then resale them at a mainland discount.
Rival Estee Lauder revealed earlier this month that it expects to slash 3 to 5 per cent of its worldwide staff to boost profitability as Chinese consumers cut down on non-essential purchases.
China’s economy has not recovered as swiftly as expected from the Covid-19 disaster, hampered by a property crisis and rising young unemployment.
L’Oreal has outperformed Estee Lauder in China, accounting for the largest proportion of the country’s USD 78.9 billion beauty and personal care industry, where its luxury business leads in high-end cosmetics.
Estee Lauder’s overall sales fell 8% over the same period. L’Oreal’s operating margin for 2023 was 19.8 per cent, in line with estimates.
