North American sales are recovering, but comparable sales growth is below expectations; L'Oréal S.A. sees the largest intraday drop in nearly 6 years | Earnings Report Insights

L'Oréal announced its financial report on Thursday, showing that the company's comparable sales growth in the fourth quarter fell short of analysts' expectations, leading to a drop of 8.9% in the ADR stock price listed in the United States, marking the largest intraday decline since March 2020.

Here are the key points from L'Oréal's financial report:

Key Financial Data:

Sales: L'Oréal's sales in the fourth quarter were €11.25 billion, while analysts expected €11.34 billion.

Comparable Sales: Comparable sales grew by 6% in the fourth quarter, with analysts expecting a growth of 6.46%.

Operating Profit: The operating profit for the fourth quarter was €8.89 billion, while analysts expected €8.94 billion.

Segment Data:

Professional Products: Sales were €1.38 billion, with market expectations of €1.37 billion; comparable sales grew by 7.6%, with market expectations of 7.74%.

Consumer Products: Sales were €3.91 billion, with market expectations of €3.99 billion; comparable sales grew by 4.8%, with market expectations of 4.84%.

L'Oréal Luxe LFL: Sales were €4.22 billion, with market expectations of €4.34 billion; comparable sales grew by 4.5%, with market expectations of 7.82%.

Derm Beauty LFL: Sales were €1.73 billion, with market expectations of €1.64 billion; comparable sales in the Derm Beauty segment grew by 11.5%, with market expectations of 5.78%.

Regional Data:

North America Market: Comparable sales grew by 8.6%, with market expectations of 7.51%.

North Asia Market: Comparable sales grew by 0.6%, with market expectations of 5.44%.

European Market: Comparable sales grew by 6.6%, with market expectations of 4.19%.

South Asia Pacific, Middle East, North Africa, and Sub-Saharan Africa Market: Comparable sales grew by 10.7%, with market expectations of 11.6%.

Latin America Market: Comparable sales grew by 8.2%, with market expectations of 7.72%.

Full Year Performance for 2025

Operating Profit: Operating profit was €8.89 billion, a year-on-year increase of 2.4%, with market expectations of €8.94 billion.

Operating Profit Margin: The operating profit margin was 20.2%, compared to 20% the previous year, with market expectations of 20.2%.

Operating Profit: Operating profit increased by 2.4% year-on-year to €8.89 billion, slightly above analysts' expectations of €8.88 billion.

Net Profit: Net profit was €6.13 billion, a year-on-year decrease of 4.4%, with market expectations of €6.49 billion.

Earnings Per Share: Adjusted earnings per share were €12.71, compared to €12.66 the previous year, with market expectations of €12.86.

Comparable Sales: Comparable sales grew by 4%, with market expectations of 4.12%

Dividends: Annual dividend of €7.20 per share, analysts expected €7.19.

L'Oréal stated that as the company seeks to consolidate its leading position in the beauty market, it is confident in continuing to achieve revenue and profit growth in the future.

CEO Nicolas Hieronimus stated in Thursday's earnings update:

“We remain optimistic about the outlook for the global beauty market and are confident in continuing to outperform the market.”

“As we previously committed, supported by the acceleration of new product launches and the gradual improvement of the beauty market, the company's organic revenue growth is faster quarter over quarter.”

Due to several key data points in the fourth quarter falling short of analysts' expectations, the company's ADR stock price listed in the U.S. fell by as much as 8.9%. Analysts at RBC Capital Markets released a report after the earnings update, stating that investors will focus on the company's more detailed assessment of the growth prospects for the beauty market during the briefing held on Friday.

North American Market Recovery

According to a report released by McKinsey last year, the skincare, haircare, makeup, and fragrance industries are expected to grow by about 5% annually, with the total industry size reaching approximately $590 billion by the end of this decade. L'Oréal is the market leader, with annual sales far exceeding U.S. competitors such as Estée Lauder and Johnson & Johnson's beauty business.

Media reports indicate that growth has slowed in recent quarters: in China, consumers are turning to lower-priced local brands; in the U.S., consumer spending is more cautious; meanwhile, some independent brands are capturing market share.

However, in recent months, purchases of creams and makeup in the U.S., the world's largest cosmetics market, have rebounded. L'Oréal executives previously noted strong sales performance during Black Friday. L'Oréal reported an 8.6% increase in North American sales in the fourth quarter, exceeding market expectations, thanks to the launch of new products including L'Oreal Paris Plump Ambition lip oil.

Last year, L'Oréal launched a "Beauty Stimulus Plan" to accelerate the speed of new product launches and drive sales growth. Analysts at JP Morgan earlier this month cited NielsenIQ data indicating that L'Oréal has gained market share in categories such as conditioners, shampoos, and creams.

However, in the North Asia region, sales grew only 0.6%, far below the market expectation of 5.6%. L'Oréal stated that the travel retail business remains "challenging," but the mainland China market is "gradually stabilizing."

Ongoing Mergers and Investments

In recent months, L'Oréal has continued to consolidate its leading position in the beauty industry through mergers and investments. The company stated that global demand for cosmetics and fragrances is growing. In October last year, L'Oréal agreed to acquire the beauty business of Kering Group for approximately $4.7 billion, which includes the fragrance brand House of Creed, as well as brands under Kering such as Balenciaga and Saint Laurent (and in the future for Gucci after the existing licensing agreement with Coty expires) The rights to develop perfumes and beauty products.

At the end of last year, L'Oréal continued to expand its presence in this field by increasing its stake in Swiss dermatology company Galderma to approximately 20%, a transaction valued at around $4.9 billion based on the stock price at that time. In June of last year, the company also acquired a controlling stake in the British skincare brand Medik8.

Hieronimus stated, "We are ready to further accelerate growth."

So far this year, L'Oréal's stock price has risen by about 7%; meanwhile, beauty and personal care product manufacturer Unilever has increased by about 10%, and smaller competitor Beiersdorf has risen by 12%