By Mimosa Spencer
PARIS (Reuters) -L'Oreal shares fell on Friday after the French cosmetics company missed sales expectations, hurt by a disappointing performance in Asia at the end of the year.
L'Oreal reported a 6.9% rise in fourth quarter sales after the market closed on Thursday, slower growth than in the previous quarter. Sales totalled 10.6 billion euros ($11.4 billion), shy of expectations for 10.9 billion euros, according to consensus estimates cited by Barclays.
Sales grew in all regions except North Asia, where they were down 6.2% to 2.97 billion euros.
The company's travel retail business suffered from tighter control by the Chinese government of resellers known as "daigou". The resellers purchase inventory at lower prices in other markets and resell them at a discount in the mainland.
By late morning in Paris, L'Oreal shares were down 5.5%.
In a presentation to analysts, CEO Nicolas Hieronimus said although the Chinese market had been disappointing in 2023, its performance had been "pretty positive" in January.
"We don't expect the Chinese market to be over-dynamic in the first half. We are more ambitious for the second half."
Analysts at Barclays said they had anticipated Asia travel retail issues would take longer to be resolved while analysts at Deutsche Bank said: "We are of the view that headwinds in China are structural not just cyclical."
L'Oreal still outperformed its main rival Estee Lauder (NYSE:EL) whose sales declined 8% overall in the same quarter.
L'Oreal's 12-month forward price-to-earnings ratio, based on projected earnings, is 34.3, trailing Estee Lauder at 39.7, according to LSEG data.
The company plans to buy back shares of 500 million to 750 million euros, Chief Financial Officer Christophe Babule told analysts.
The company also said on Friday it had signed a licensing agreement with high end fashion label Miu Miu for beauty products.
L'Oreal expects to launch the first fragrances in 2025 under the agreement, which encompasses the creation, development, and distribution of beauty products.
(Additional Reporting by Piotr Lipinski; editing by Matt Scuffham, Barbara Lewis, Elaine Hardcastle)