L’Oréal reported first-quarter sales that beat expectations Thursday, with the cosmetics giant’s shares climbing more than 8 percent as investors received reassurance amid a wave of profit warnings from the broader luxury sector.
The Paris-listed group posted like-for-like sales growth of 7.6 percent in the three months to March, driving turnover to €12.2 billion (£10.4 billion) — surpassing City forecasts. The outperformance was driven in large part by Europe, where like-for-like sales rose 10.3 percent to €4.4 billion.
Chief executive Nicolas Hieronimus attributed Europe’s showing to what the company calls the “lipstick effect” — the tendency for consumers to buy affordable beauty products as a psychological pick-me-up when economic uncertainty bites. Consumer research conducted by L’Oréal found that shoppers were willing to trade down on bigger purchases while maintaining spending on cosmetics as “a compensation for a stressful climate and a psychological buffer.”
The trend stands in contrast to broader luxury spending pressures. LVMH, Kering — owner of Gucci — and Hermès have all flagged concerns about the impact of the Iran conflict on consumer confidence. Hieronimus said the direct effect on L’Oréal had been limited so far, with the Middle East representing less than 3 percent of group sales.
China offered further encouragement, with mid- to high-single-digit growth reported after years of a bruising slowdown. Hieronimus described a “clear acceleration” for 2025, with L’Oréal outpacing the wider market. North Asia as a whole slipped 4 percent like-for-like to €2.7 billion, however, underscoring an uneven recovery.
Barclays analysts described the underlying performance as “very impressive,” highlighting professional products and dermatological beauty as standout divisions. Premium haircare and fragrances drove market share gains across North America, North Asia and Latin America.
“Despite current geopolitical and macroeconomic uncertainties, we are optimistic about the outlook for the global beauty market,” Hieronimus said, adding that he remained confident of another year of growth in both sales and profit.