L’Oreal Group posts Q1 gain, but finds difficulties in North America

PARIS The L’Oreal group posted a sales increase of 2.1 percent for the first quarter, but faced some hurdles in North America, where the environment proved to be “exceptionally difficult.”

“In North America, after an exceptional fourth-quarter 2007, we had been anticipating a lackluster first quarter; in fact, it turned out to be more difficult because of lower footfall in department stores and larger than expected inventory reductions by our distributors,” stated Jean-Paul Agon, chief executive officer. “We are confident in our ability to accelerate our growth over the coming quarters thanks to favorable launch phasing, better prospects in North America and continuing dynamism in the other zones. We are, therefore, able to confirm our annual like-for-like growth target range of 6 percent to 8 percent.”

In North America, the consumer products division recorded negative growth reflecting a 2007 comparison base boosted by the launch of Nutritioniste by Garnier, and a very sluggish marketing combined with strict inventory management by distributors.

However, the beauty company noted that it strengthened its leadership in makeup given the success of Bare Naturale and Infallible Lip by L’Oreal Paris, and the launch of Mineral Power from Maybelline.

In facial care, Nutritoniste by Garnier is achieving strong sell-through growth thanks to the successful launch of Skin Renew Anti-Sun Damage.

The company expects launch phasing to be more favorable in the second quarter.

Total sales increased 2.1 percent to 4.359 billion euros ($6.96 billion). Like-for-like the increase in sales was 5.1 percent.

The Body Shop, which has 2,442 stores in 59 countries, posted like-for-like sales growth of 7.4 percent. Retail sales increased 6.4 percent, with a comparable store base, the increase in sales totaled 1.9 percent. All of the geographic zones, except North America, made a solid start to the year, according to the company, with particularly strong performances in Russia, Romania, Thailand, Malaysia, Sweden and the United Arab Emirates.