L'oreal Co. (LRLCY) shares jumped more than 5% after the company revealed a strong rise in quarterly sales.
The beauty and cosmetics company posted first-quarter sales of €11.24 billion, up 8.3% on a reported basis. On a like-for-like basis, sales rose 9.4%. Adjusted like-for-like growth came in at 8.1%.
The company's first-quarter sales included a positive €130 million phasing impact ahead of the implementation of new IT systems in North America.
The company's performance was boosted by a strong 19.6% rise in dermatological beauty sales, which came in at €2.02 billion. Consumer products also reported a solid performance, with sales in the division increasing 9.2% year-over-year.
Every region grew year-on-year, with the exception of North Asia, which saw sales decline by 3.9%.
“2024 is off to a very good start with like-for-like growth of +9.4%, perfectly illustrating the power of our unique model," said Nicolas Hieronimus, CEO of L'Oréal (EPA:OREP). "Continued double-digit growth in Europe, coupled with ongoing strength in emerging markets more than offset the only gradual recovery in North Asia. The outstanding performances of dermatology and mass compensated the short-term challenges in luxury."
Looking ahead, while Hieronimus noted that the environment continues to be marked by economic and geopolitical tensions, he said the company is optimistic about the outlook for the beauty market and confident in its ability to keep outperforming it and to achieve another year of growth in sales and profit.
Following the report, analysts at Bernstein released a note covering the stock, maintaining an Outperform rating and €480 price target on L'Oreal shares. They highlighted that L’Oréal is "able to move A&P around the world, across categories and demographics, thereby not only optimising its global growth, but also making that organic growth a lot more resilient."
"With Daigou drag out of the base by Q3, and ‘easy comps’ from destocking in H2, we think markets will have to get used to double-digit organic growth again," analysts at Bernstein added.
Meanwhile, analysts at Jefferies kept an Underperform rating and €355 price target on the stock. The firm said that amid a noisy few weeks on beauty with fears of a market slowdown, "this result should drive a strong positive share reaction."