L’Oréal proves it’s still worth it with third-quarter surge

French cosmetics group L’Oréal surged after sales of its high-end cosmetics continued to rise in the third quarter, with Chinese demand leading the world’s biggest maker of beauty products to beat growth estimates.

Sales in L’Oréal’s luxury division, including Lancôme and Kiehl’s, jumped 16 per cent. Overall sales totalled €6.47 billion, besting the €6.34 billion forecast by analysts.

The same wave of Chinese demand that has boosted luxury giant LVMH and Gucci owner Kering SA is lifting L'Oréal, whose high-end products such as its €31 Yves Saint Laurent eyeliner are making up for sluggish performance in the company's mass-market brands.

The latest quarter continues a pattern, with sales in the division including mainstream brands such as Maybelline makeup falling below expectations. L’Oréal is investing in digital services and racing to expand its line-up of naturally inspired products to try to gain share.

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Management signalled optimism that the China trend can continue, despite a trade war with the US and a customs crackdown on undeclared purchases that have unnerved some investors in luxury companies. Chief executive Jean-Paul Agon said on a call that he's seen no signs of a slowdown in the region.

– Bloomberg