Shares of L'Oréal dropped sharply in Paris trading on Friday, falling 4.1% to €375.45 by midday, as the cosmetics giant reported quarterly sales that disappointed investors. The company's fourth-quarter like-for-like revenue increased 6%, slightly below the 6.3% consensus estimate among analysts.
Asia Performance Disappoints
The primary concern for markets was the company's performance in North Asia, which accounts for approximately one-quarter of L'Oréal's total revenue. Sales in the region grew just 0.6% during the quarter, well below the 5.6% growth analysts had anticipated. Management cited continued weakness in travel retail, particularly airport duty-free sales, as a significant headwind.
Finance chief Christophe Babule acknowledged that investors "expected more from North Asia," pointing to specific challenges in South Korea and softer demand from Chinese travelers due to operational changes at domestic airports. The stock had climbed about 7% year-to-date before Friday's session but now trails peers like Unilever and Beiersdorf.
Market Implications
The disappointing Asian results raise questions about the pace of recovery in China, which many investors had hoped would drive growth for global beauty companies. Analysts from JP Morgan noted that the fourth-quarter performance makes a 2026 revenue acceleration difficult to envision, while Deutsche Bank cautioned that earnings momentum could slow in the near term.
European markets showed limited reaction to the decline, with the STOXX 600 hovering near unchanged levels as traders focused on upcoming U.S. inflation data and broader market concerns about artificial intelligence's impact across sectors.
Financial Results and Outlook
For the full year 2025, L'Oréal reported sales of €44.05 billion, representing a 4.0% increase on a like-for-like basis. The company achieved an operating margin of 20.2%. The board proposed a dividend of €7.20 per share, with a shareholder vote scheduled for April 24. Shares will trade ex-dividend on April 29, with payment set for May 4.
CEO Nicolas Hieronimus expressed optimism about the 2026 global beauty market outlook while acknowledging ongoing macroeconomic uncertainties. Investors will now watch whether the stock stabilizes following the initial post-earnings decline, with particular focus on North Asian performance and travel retail trends.
