PARIS, France – Maybelline maker L’Oreal sales fell more than expected in the second quarter, although the French beauty group managed to curb some major win erosion when the COVID-19 pandemic was forced to close.
The company, which also makes Lancome creams and makeup for brands like Armani, sounded more optimistic in the second half of the year, saying it was planning product launches and was determined to “find the path to growth again.”
In China, the largest market, and where lockdown measures were eased several months ago, comparable earnings rose 30 percent from April to June, it added.
Corona virus locks 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 at airports, which also became paralyzed when tourist numbers dried up.
The group was also hurt by the closure of hair salons, and sales of professional products plummeted more than those of other divisions.
Online sales, however, increased, L’Oreal added, with rising demand for hair tones for home use, for example.
However, total sales totaled $ 5.85 billion ($ 6.90 billion) in April-June, down 18.8 percent on a comparable basis, eliminating currency effects and acquisitions.
Analysts had expected an average sales decline of 13.1 percent on a comparable basis, according to a Berenberg consensus forecast.
L’Oreal operating margins were 18 percent at the end of the first half of the year, down only slightly from 18.6 percent at the end of 2019, and cut costs such as advertising.
For the period January through June, the group had a net profit of 2.14 billion euros, against 2.47 billion euros a year earlier.
L’Oreal will hold a conference call with analysts on Friday.
By Sarah White and Sudip Kar-Gupta; Editors: Mark Potter and David Evans.