Shares of L’Oreal SA (FR:OR) plunged over 5% yesterday after the French beauty company missed sales and earnings estimates for Q4 FY23. L’Oreal’s results were marred by China’s “stagnating” beauty market, which saw North Asia sales decline by 5.8% in the full year. Even so, CEO Nicolas Hieronimus remains optimistic about the company’s outperformance in Fiscal 2024.
Paris-based L’Oreal is the world’s largest beauty company offering skincare, makeup, haircare, and fragrance products. Some of its renowned brands are Lancôme, Yves Saint Laurent, Maybelline, Kiehl’s, L’Oréal Paris, Garnier, and Armani. OR shares have gained over 19% in the past year.
Details About L’Oreal’s Results
In Q4 FY23, sales grew 2.8% year-over-year to €10.61 billion, slower than the consensus estimates of €10.9 billion. Quarterly sales from North Asia fell 9.9% compared to Q4 FY22.
For the full year of Fiscal 2023, L’Oreal posted a 7.6% annual jump in sales to €41.18 billion, lower than the consensus of €41.49 billion. On a like-for-like basis, the top line grew by 11%. L’Oreal’s Consumer Products and Dermatological Beauty segments showed resilience in demand during 2023. Meanwhile, like-for-like sales from all regions delivered double-digit growth, except for North Asia, which was impacted by weak demand in China’s beauty market.
L’Oreal’s full-year net profit grew 8.4% to €6.18 billion, lower than the consensus of €6.25 billion. Moreover, adjusted earnings came in at €12.08 per share, up 7.3% compared to Fiscal 2022 but slightly short of the consensus estimate of €12.15 per share.
CEO Hieronimus acknowledged that the difficult geopolitical and inflationary environment weighed on 2023’s results, but he remains optimistic about the outlook of the beauty market in 2024. Earlier this month, L’Oreal showed its commitment to continue investing in China despite the requirement of enhanced ingredient disclosures.
What is the L’Oreal Stock Price Forecast?
Following the results, two analysts reiterated a Sell rating on OR shares and kept their price targets unchanged. Meanwhile, Bernstein analyst Bruno Monteyne reiterated a Buy rating on KER stock and has the highest price target to date of €480 (6.2% upside).
Overall, with four Buys, four Holds, and three Sell ratings, OR stock has a Hold consensus rating on TipRanks. The L’Oreal SA share price forecast of €412.09 implies 8.8% downside potential from current levels.
