By Helena Smolak

L'Oreal posted higher first-quarter sales, boosted by demand for its high-end fragrances and makeup in Europe that offset weakness in the U.S. before President Trump unveiled his sweeping tariffs.

Nicolas Hieronimus, chief executive of the French cosmetics company, said Thursday that the U.S. market turned out to be tougher than the company expected at the start of the year, while China--a source of weakness for the industry as of late--wasn't as bad as anticipated. Europe was the top growth contributor for the group, Hieronimus said.

In response to U.S. tariffs, L'Oreal built inventory for several brands and could raise prices and relocate some production, but doesn't want to take any measures that are temporary, Hieronimus said.

L'Oreal reported sales of 11.73 billion euros ($13.38 billion) for the three months ending March 31, up 4.4% from last year and 3.5% on a like-for-like basis. The figure compares with analysts' forecasts of 11.47 billion euros, according to a Visible Alpha consensus.

The company--home to brands such as L'Oreal Paris, Garnier and Maybelline New York--booked 4.9% higher sales in reported terms in Europe, at 3.91 billion euros. In North America, revenue fell 1.4%, to 2.97 billion euros. Sales in North Asia--which includes China--and emerging markets rose 8.4% and 12%, respectively.

Double-digit sales growth for its fragrances such as Born in Roma from Valentino and MYSLF from Yves Saint Laurent fueled growth at L'Oreal's Luxe business, the group's main growth driver last quarter, it said.

Earlier this week, luxury bellwether LVMH reported weaker-than-expected sales for the quarter, with a decline in its perfumes and cosmetics division.

Still, L'Oreal's Hieronimus told analysts in a post-earnings call the beauty market is now more likely to grow this year at the lower end of the 4% to 4.5% range he predicted in February due to a slower-than-expected start. That forecast assumes a growth uptick in the second half of the year, he added.

Hieronimus said he expects L'Oreal to keep outperforming the market and achieve another year of growth in sales and profit. The company aims to drive growth and manage its profit-and-loss account to offset the impact of U.S. tariff hikes, he said.

Analysts say L'Oreal is relatively well-positioned to withstand potential tariffs, due to its substantial U.S. manufacturing footprint, even though the company's sales could be hit by weaker consumer sentiment. Its high-margin products from its Luxe business and dermatology-beauty products are imported from the European Union.

Write to Helena Smolak at helena.smolak@wsj.com

(END) Dow Jones Newswires

April 17, 2025 13:28 ET (17:28 GMT)

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