L'Oreal Q1 sales boosted by emerging markets

The group, based in France, reported an overall like-for-like 7.9 per cent increase for the three-month period ending 31 March to €4.268bn, from €3.94bn in the same period last year, attributed in part to the lucrative acquisition of The Body Shop last year. With share prices reaching a six-year high the maker of Lancome has received encouraging feedback following the results, with CEO of L'Oreal commenting, "The first quarter sales figures are encouraging, even if they cannot be considered to be an indication of overall annual performance. All the divisions contributed equally to this dynamic performance". ​​Led by the active cosmetics segment, thanks in part to the Inneov brand, sales in the company's core cosmetics business saw an overall increase of 8 per cent, reaching €4.03bn, with the consumer products segment coming in second, followed by both the professional and luxury divisions, tying at the bottom. North America reported the weakest sales figures across the geographic regions, posting an overall 5 per cent fall from €1.014bn last year to €963m in the comparable quarter this year, due mainly to the weak dollar. Western Europe also reported disappointing figures, showing a moderate 4.0 per cent increase to reach €1.920mn - suffering from less demand for cosmetics in pharmacies and a decrease in French sales. However, the shortfalls were outweighed by the emerging markets, which have been predicted to become a lucrative area for manufacturers. This was highlighted by the Eastern Europe segment, which reported a huge 30 per cent like-for-like sales increase from €214mn to €289mn. The growth was driven by Russia, which saw a noteworthy increase in all divisions. Poland, Romania and the Ukraine also showed significant increase in sales, which was put down to the La Roche Posay's expansion in these areas. The 'Luxury Products' division was also a key driver in these areas, boosted by the opening of a number of prestige beauty outlets - said to have led to an overall decrease in department store sales in the cosmetics market. Indeed, Latin America also showed huge growth potential, with sales rising 19 per cent from €225m to €244m boosted by Brazil - pitted to be a dynamic market of the future. Products driving this market are the Forte Therapy by Matrix in the 'Professional Products' and Redermic by La Roche Posay from the 'Active Cosmetics' division. L'Oreal's acquisition of the natural and organic brand The Body Shop has no doubt made the company more attractive to the 'green' consumer who strives to look after both their body, and the environment. Sales in this area grew 6.4 per cent on a like-for-life basis which was boosted by the launch of new lines for sensitive skin that include Aloe Vera, and new Pink Grapefruit toiletry and body care products. Some 25 new Body Shop stores were opened, bringing the total amount to 2,290. These stores performed particularly well in Canada, Japan and Russia, but a slow start was reported in the USA. "This good start to the year confirms that we can be confident in meeting the target we have set ourselves: to return to a growth rate bracket of +6 per cent to +8 per cent like-for-like for 2007"​ said Agon.