Estée Lauder Shares Fall to 2017 Levels on L'Oréal Warning About Beauty Industry
By Sabela Ojea
Shares of Estée Lauder dropped to 2017 levels after competitor L'Oréal said it expects growth to slow in the global beauty market, mainly because of weakness in China.
Estée Lauder's stock was down 5% to $105.30 on Friday, at the lowest levels since the summer of 2017. Overall, shares have declined 28% since the beginning of the year, and 46% over the past 12 months.
L'Oreal Chief Executive Nicolas Hieronimus told JPMorgan investors that the French cosmetics company now expects the global market to grow 4.5% to 5% this year, down from a prior outlook of above 5%.
The rebound in China isn't materializing as expected, he said.
Overall, the Mainland China market, Estée Lauder's weakest market followed by the U.S., remains slightly negative in the second quarter for L'Oréal, according to Hieronimus.
In the U.S., Estée Lauder's home market and L'Oréal's main market, some L'Oréal channels such as mass makeup category are slowing, while the luxury division is accelerating, he said.
L'Oréal's downgraded outlook for the beauty market as a whole comes after Hieronimus said the luxury business remained lackluster in China, and warned about the U.S. market.
"I don't see today any changes on the [Chinese] market," Hieronimus said at a BNP Paribas conference earlier this month.
The online business remains dynamic there, and the offline market is still more challenging. The travel retail business is also weak, with the key duty-free island of Hainan seeing lower-than-expected conversion rates and sales despite the rise in tourists, he said.
Hieronimus also said that growth in the U.S. has slowed to growth of mid-single digits from growth rates of almost double digits in 2023.
Write to Sabela Ojea at sabela.ojea@wsj.com
(END) Dow Jones Newswires
June 28, 2024 15:47 ET (19:47 GMT)
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