PARIS – L’Oréal’s first-quarter 2025 sales growth beat expectations against a volatile backdrop.
“Globally, it’s been a real rollercoaster of economic and geopolitical challenges with daily announcements,” said Nicolas Hieronimus, L’Oréal chief executive officer, during a call with financial analysts and journalists after the market close Thursday evening.
He noted a mixed effect during the three months ended March 31, including the U.S. being more challenging than expected, while China was slightly better than foreseen.
“Europe was, once again, our single best growth contributor,” said Hieronimus. “Emerging markets remained dynamic.”
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The maker of Lancôme, Kiehl’s and Garnier products’ sales in the period reached 11.73 billion euros, up 4.4 percent in reported terms and 3.5 percent on a like-for-like basis, in line with L’Oréal’s projections.
The world’s largest beauty company’s sales increase was boosted by the net impact of IT-related inventory-building between 2024 and 2025, which translated into 100 million euros – or 2 percent growth.
VisibleAlpha consensus, cited by Jefferies, had expected L’Oréal’s first-quarter sales to rise 1.1 percent in organic terms. The bank in a note called the turnout a “helpful beat in light of anxieties.”
Fragrances, with mid-teen sales gains, and hair care, with mid-to-high single-digit sales growth, remained L’Oréal’s best-performing categories across all geographies in the quarter.
“Our makeup stimulus plan is starting to bear fruit in a market that’s unfortunately subdued,” said Hieronimus, describing the phenomenon is true in both mass and luxury. “Beside our obsession with growth, one of our key priorities is to manage our P&L in order to mitigate the impact of tariff hikes and — it goes without saying — that our truly global manufacturing footprint and our very healthy gross margin positions us relatively well versus our peers.
“We will, of course, continue to put the right fuel behind our 37 global brands to further reinforce our global leadership,” he said.
L’Oréal looks to be in a strong position to weather the mounting storm whipped up by U.S. import tariffs.
“L’Oréal’s U.S. business is relatively resilient to potential U.S. tariffs, with five factories in the U.S. and with a majority sold in the U.S. being made locally,” wrote Jeremy Fialko, head of consumer staples research, Europe, in a note.
A bit shy of 50 percent of L’Oréal’s products are manufactured in the U.S., including most of the Consumer Products division’s.
The L’Oréal Luxe and Dermatological Beauty divisions’ products are imported from the European Union, where about 30 percent of the group’s manufacturing takes place. Such products are well-positioned to cushion the tariffs’ impact due to their high margins, according to Fialko.
“They also have some products manufactured in Mexico and Canada,” he continued. “Therefore, by far the biggest risk comes from any consumer hesitancy linked to the tariffs or a squeeze on income resulting from price rises elsewhere. That said, L’Oréal may benefit should peers have to price more aggressively to offset the tariff hit.”
Hieronimus said if the tariffs do go into effect there are several ways for them to be mitigated.
“One is price increases, because it’s on categories that are in the luxury sector, you have a bit more pricing power,” he explained, adding L’Oréal had built inventory for several of its brands and that the group can relocate some of its production, since it has factories in every region of the world. “But we don’t want to take any measures on something that might be temporary, so we are watching carefully what’s happening and trying to figure out what will be the end game.”
Hieronimus said that if tariffs are confirmed they will mainly impact L’Oréal’s margin in the second half of the year.
Meanwhile, the company’s travel-retail Asia business remains highly negative in sell-out, both on the duty-free island of Hainan, China, and in South Korea.
“The downtown stores in travel really have lost traction with the healthy reduction of daigous, and it’s more airports [around] the world that are driving the growth of travel retail,” said Hieronimus.
The executive had earlier this year forecast the global beauty market will grow at the low end of 4 percent to 4.5 percent in 2025, and said as of now there were no hard facts that would make him change that prediction.
L’Oréal estimated that during the first quarter the beauty market increased by about 2 percent.
“Europe is still holding quite well overall, maybe with the exception of France,” said Hieronimus, who explained Southern and Eastern Europe remain quite dynamic.
The executive remains confident in L’Oréal’s ability to continue outperforming the worldwide beauty market in 2025 and to achieve again growth in sales and profits.
“We expect growth to accelerate progressively,” Hieronimus said.