L'Oréal luxury division expected to outperform world targets
US economic recovery and Chinese growth are main contributors
The luxury cosmetics division of L'Oréal appears set to outpace the 6% world market growth target for this sector in 2011, helped mainly by the US economic recovery and Chinese growth. The division includes the Armani, YSL, Kiehl's and Shu Uemura brands, accounting for some 23% of the group's global cosmetics sales. The French domestic market is also expected to perform well for the sector after encouraging first quarter economic data.
Last year, L'Oréal's luxury division sales reached €4.5bn, a rise of about 7% and this year sales rose 7.7% in first quarter, the highest rate for the group's divisions. Company sources have noted, however, that this growth rate remains below the 11% reported by LVMH for its perfumes and cosmetics sector and L'Oréal has so far declined to issue forecasts for the current year. President Jean-Paul Agon has said only that the group is expected to fare better than the world market where growth has been between 3% and 4%.