L'Oreal Q3 sales beat forecasts as consumers indulge in premium beauty

By Dominique Patton

PARIS, Oct 22 (Reuters) - French cosmetics group L'Oreal beat third-quarter sales forecasts on Thursday, as shoppers around the world indulge in more pricy haircare and premium skin products.

The Paris-based maker of CeraVe moisturiser and Prada perfumes has doubled down on its premium offer in recent years, adding more couture perfumes to its stable of blockbuster names and rolling out new haircare products under its professional hair salon brand Kerastase.

Its weight in both segments is allowing it to profit from growing global spending on beauty, including in China where demand for higher-end brands is accelerating.

Sales from July to September rose 7.7% on an adjusted like-for-like basis to €11.56 billion ($12.95 billion), topping analysts' consensus forecast for 5.9% growth in a Visible Alpha poll. The number strips out currency effects and the effects from phasing in of a new global IT system.

"The global beauty market, once again, proved its resilience in a challenging context — and we continued to significantly outpace it," CEO Nicolas Hieronimus said in a statement.

L'Oreal's US-listed shares rose 8.3% after the sales report. 

Beauty has been a bright spot in an otherwise sluggish consumer goods sector, with analysts and executives pointing to the "lipstick effect" of consumers treating themselves to affordable luxuries during challenging times.

L'Oreal's luxury division, which generates more than a third of group revenue, grew 7% on a like-for-like basis, well ahead of a 4.5% forecast, helped by strong demand for its best-selling fragrances like Prada Paradigme and for high-end skincare in China.

China's beauty market is expanding again after two years of contraction, as middle-class consumers shift spending from entry-level luxury goods towards prestige beauty products. Growth slowed slightly in the third quarter against a tougher base of comparison than earlier in the year, Hieronimus told analysts on a call, but some brands like Helena Rubinstein are growing in 'high double-digits'.

"Our products are more affordable than higher-priced luxury and consumers are indulging in them," he said.

Other skincare lines like SkinCeuticals and La Roche-Posay which has launched new sunscreen and serums are also growing in double-digits, he added, while the company is also targeting consumers using GLP-1 weight-loss drugs, promoting products aimed at addressing secondary effects such as sagging facial skin.

Sales in Europe, L'Oreal's biggest market, rose nearly 9%, while revenue in South Asia and the Middle East jumped 19.5% on strong demand in Gulf countries and Vietnam.

Shares in L'Oreal, France's most valuable listed company, are up 11% this year.

($1 = 0.8927 euros)

(Reporting by Dominique Patton; Editing by Mark Potter)