L’Oréal Beats Sales Expectations as Haircare Demand and the ‘Lipstick Effect’ Boost Growth

L’Oréal reported stronger-than-expected second-quarter sales, driven by robust demand for haircare products and makeup, particularly mascaras, according to Reuters.

The world’s largest cosmetics company continued to outperform the broader beauty market despite signs of slowing consumer spending in several regions.

Sales Exceed Market Forecasts

According to Reuters, L’Oréal generated €11.6 billion in sales during the three months ending in June, representing 6.3% like-for-like growth after adjustments related to the rollout of a new IT system.

The result exceeded analysts’ expectations, which had forecast sales growth of 5.7%, based on a Visible Alpha consensus.

Analysts at Jefferies described the performance as particularly strong given softer demand affecting several competitors, adding that they expected L’Oréal shares to outperform following the announcement.

Haircare and Online Sales Drive Performance

L’Oréal’s largest business division, focused on mass-market consumer products, delivered stronger-than-expected growth, supported by rising demand for haircare products across Europe and strong online sales.

Reuters notes that Chief Executive Officer Nicolas Hieronimus previously highlighted the “lipstick effect”—the tendency for consumers to continue purchasing affordable beauty products during periods of economic uncertainty.

Sales in Europe, L’Oréal’s largest market, increased 6.7%, while revenue in North America rose 5.9%, demonstrating resilient demand despite ongoing cost-of-living pressures.

Luxury Beauty Faces Mixed Conditions

The company’s Luxe division, which accounts for roughly one-third of total sales, recorded 4.7% growth, below market expectations.

Although L’Oréal achieved double-digit growth in China within the division, Reuters reports that continued weakness in the country’s travel retail sector weighed on overall performance.

The results contrast with recent updates from luxury groups LVMH and Hermès, both of which reported slower growth in their perfume and cosmetics businesses, while Unilever posted 8% underlying sales growth in its Beauty & Wellbeing division during the same period.

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