The sale of The Body Shop, weighs in on the results of The l’oréal

The giant French cosmetics L’oréal published Thursday, 2 November, sales for the third quarter in slight decline, mainly due to the sale of its retail chain The Body Shop. L’oréal had entered into an agreement with the brazilian group Natura Cosméticos to give him The Body Shop to create a giant world of green cosmetics. The transaction was valued one billion euros.

The revenue of L’oréal in the third quarter amounted to 6.01 billion euros, down 0.9%, an amount slightly less than the consensus of analysts Factset, who had planned 6.08 billion. In the third quarter of 2016, The Body Shop had contributed to 200 million euros in turnover.

During a conference call, Christian Mulliez, chief financial officer, has confirmed the annual target of a record operating margin, at 18% of sales, compared to 17.6% in 2016. “We are clearly continuing to outperform (our competitors),” said the CEO Jean-Paul Agon at the conference.

Like-for-like sales this quarter were up 5.1%, brought as in previous results by the activity Luxe and the Active Cosmetics division, whose products are sold in pharmacies and parapharmacies. The division L’oréal Luxury “is booming,” said Jean-Paul Agon, with a growth of 8.9% (+11.2% in comparable data).

The growth of the category of products Active Cosmetics, if it was slightly slowed down compared to the second quarter, remains significant, with a rise of 11.7% (6.2% comparable). According to the CEO, the growth of this division “will continue very well” because “there is a strong demand for health products”, including for the skin. The group also plans the worldwide deployment of its product to CeraVe the next year. For the moment, it is mainly distributed in the United States.

On the side of the professional products, the results are less good with a sales decline of 3.6% (+0.5% in comparable data). Ditto for the consumer products division, which “remains slowed by the u.s. and French is always hard”, with a fall in sales of 1.4% (but up 2.3% in comparable).

Driven by Asia

On the set of “new markets” (which include Asia, Latin America, eastern Europe, Africa and the Middle East) growth was 4.6% (10.2% in comparable). “The market is driven by strong consumption in Asia, particularly in China”, analyzed Jean-Paul Agon. According to the officials, China has proved full of “good news” during this quarter, in terms of sales but also in terms of partnership with the giant chinese online commerce such as Alibaba.

At the global level, the amount of online sales rose by 31.6%. L’oréal expects further positive results in China in the future, especially with the approach of November 11, “date singles”, but also the more extensive operation of online sale in the world. Sales have, however, been more measured in Western Europe and in North America, two markets that were “a little low recently”. The increase in sales in these two areas was, respectively, 1.5% and 0.5% (+2.6% and +1.3 per cent).

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