Logo of French cosmetics group L’Oreal in Paris
L’Oréal fell sharply in the stock market on Friday after disappointing sales in Asia, as its “travel retail” activity (sales to travelers) continued to feel the effects of new regulations on a parallel resale market in China.
The stock fell 6.06% to 425.65 euros on the Paris stock exchange, around 08:10 GMT, against a 0.1% decline for the CAC 40.
L’Oreal on Thursday reported a 6.9% increase in its fourth-quarter sales to 10.61 billion euros, which is certainly an increase but slower than the previous quarter.
The figure is slightly lower than expectations of 10.9 billion euros, according to estimates cited by Barclays.
The French group’s travel sales activities, particularly in Hainan and South Korea, have been penalized by the Chinese government’s crackdown on a parallel resale market called Daigo.
Resellers buy inventory from other markets at lower prices to resell it on the continent.
“North Asia and the luxury (segment) were well below expectations and we believe the headwinds in China are structural and not just cyclical,” Deutsche Bank wrote in a note.
(Writing by Claude Chandjou, Editing by Kate Entringer)
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