Shares in L’Oreal (OR) plunged 6.5% to €366.7 in Paris after the French beauty giant’s FY25 and Q4 sales growth undershot market expectations. Investors were especially disappointed by misses in the group’s luxury and North Asia businesses, where the market was expecting better sales growth.
| Share price: €366.7 (-6.5%) | PE: 29.5x |
| Market cap: €209bn | Yield: 2% |
L’Oreal is emerging from a tough past 18 months. Growth in the global beauty market, which boomed in 2021, slowed in 2025, although green shoots are now emerging.
Like-for-likes accelerate
L’Oreal is the owner of L’Oréal Paris, the number one beauty brand in the world, as well as Maybelline and Garnier.
Q4 like-for-like sales grew 6% to €11.25bn, an acceleration on the 4.2% growth seen in Q3. However, this was below the 6.3% increase analysts were looking for.
Despite a challenging market backdrop, FY25 group like-for-like sales rose 4% to top €44bn.
Q4 sales growth of 8.6% in North America and 8.2% in Latin America offset weaker sales in North Asia, the world’s second biggest beauty market, where sales edged up just 0.6%.
L’Oreal’s Europe revenues grew 6.6%. Sales skipped 10.7% higher in SAPMENA-SSA (South Asia-Pacific, the Middle East, North Africa, and Sub-Saharan Africa).
What did the CEO say?
‘As we had promised, organic top-line growth accelerated quarter after quarter, boosted by the step-up in our launch plan and supported by a gradually improving beauty market,’ explained CEO Nicolas Hieronimus.
‘At +4%, L’Oreal grew once again ahead of the market; a key highlight was the strong second-half recovery in our two largest countries, the US and China, while we continued our Emerging conquest.’
Hieronimus is ‘optimistic’ about the global beauty market in 2026. Moreover, the CEO is confident in the company’s ability to keep outperforming, thanks to its ‘multi-division category strategy’.
Less upbeat were analysts at JPMorgan, who warned ‘the fourth quarter set up makes it difficult to envision top-line acceleration in full year of 2026’. The broker remains cautious on European demand in 2026.
With the beauty market seeing green shoots of recovery and L’Oreal’s like-for-likes in growth, today’s sell-off presents a buying opportunity in a high-quality growth and income stock.
L’Oreal has historically delivered high and consistent returns and remains in rude financial health. For FY25, it generated a return on capital employed (ROCE) of 22% and a record operating margin of 20.2%.
We share Hieronimus’ confidence that the company can keep outperforming an improving global beauty market.
Read the press release here: https://www.loreal-finance.com/eng/results
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