L'Oreal Profits Shift To Asia
L'Oreal trimmed its sales target in Europe but announced
that explosive sales in growth markets, especially in
China of more than 50% meant that the company would be
able to reach its targets.
This is the fifth consecutive year where China sales
growth has topped 50%. L'Oreal has been pursuing an acquisition
strategy in
China to fuel growth.
The chairman of L'Oreal said that sales in Germany, Italy
and France were sluggish. The high growth in the developing
markets meant that the company would still be able to
meet its double-digit growth targets for the 20th consecutive
year. Sales rose 6.4% to 7.4 billion euros.
In simple terms, this means that L'Oreal's famous brand
and products are now more dependent on the growth markets
of China, India, Russia and Latin America than they have
previously been. Previously, their main growth came from
North America and Europe.
The highly profitable cosmetics industry is largely dependent
on disposable income, and is an early indicator of changes
in consumer spending patterns. In economies where money
is tight; women spend less on cosmetics. When female consumers
feel that they are able to meet their basic living needs
and have cash available, many then spend disposable income
on travel, brand clothing, health and image products.
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