French beauty products powerhouse L’Oréal has posted a strong full-year performance despite the continued drag of the important but disrupted North Asian travel retail market (see earnings call panels below for more details).
Groupwide revenue rose +4.0% like-for-like (+1.3% reported) to €44.05 billion in what the group called “another year of outperformance in an improving beauty market”.
L’Oréal Luxe posted growth of +2.8% like-for-like, +0.0% reported, slowed by challenges in Asia travel retail (most notably South Korea and China). “Momentum accelerated in the second half of the year with growth reaching +3.6% – and close to +5% outside travel retail in Asia, where the situation remained challenging,” the group said.
Groupwide sales in North Asia grew +0.5% like-for-like and -2.2% reported. Excluding travel retail, where the overall ecosystem remained challenging, L’Oréal’s growth improved from flat in the first half to +4% in the second half.
“The Group outperformed in all markets, including travel retail, thanks to its unrivalled brand portfolio and step-up in innovation,” said L’Oréal.
Speaking on a post-results earnings call, L’Oréal CEO Nicolas Hieronimus concluded on an upbeat note: “L’Oreal is entering 2026 stronger than ever. In a dynamic beauty market, we have what it takes to increase our momentum, once again outperform the market and accelerate our growth, boosted by an even stronger innovation pipeline within a systematic multi-division strategy. And the future looks bright.
“We operate in a highly attractive market, not just because of its historic organic growth, but because it is expanding to new services, new categories, new technologies where L’Oreal will play its role.
“Consumers are entering beauty ever earlier and are staying ever longer, engaging in more complete beauty strategies as life expectancy rises around the world.
“L’Oreal has what it takes to keep winning across our categories, channels and regions. In an increasingly complex environment, our unique combination of scale and agility is a very powerful competitive advantage.
“Above all, our success is rooted in our unique L’Oreal culture. The passion, expertise and fighting spirit of our teams are the real secret behind our success today and the #1 reason why we will continue to lead the beauty industry tomorrow.” {Main story continues beneath the following panel}
Earnings call highlights (1)Disruption in Mainland China travel retail counters Hainan gainsOn an earnings call, both CEO Nicolas Hieronimus and CFO Christophe Babule expanded on the disappointing North Asian travel retail Q4 performance, especially given a recent uptick in the Hainan offshore duty-free market. “I know that you expected more from North Asia given the improving news out of Hainan. The reality is that Hainan is only a small part of the travel retail ecosystem,” said Babule. “As you can see in the chart [see above] it accounts for around 20% of the total. “What we saw in the other parts of the market was continued softness in Korea and a Mainland China travel retail market that was temporarily disrupted by the suspension of the Sunrise app and the change in domestic airport operators [from 51% CDFG-controlled Sunrise Duty Free to CDFG and Wangfujing Duty Free in Beijing and from Sunrise to CDG and Avolta in Shanghai]. “To maintain healthy inventory levels, we adjusted our sell-in during Q4. Sell-out progressively accelerated and was close to flat in the fourth quarter, allowing us to improve our share by 260 basis points. Travel retail Asia now accounts for less than 4% of our sales versus more than 6% only three years ago. “Therefore, excluding the impact of travel retail Asia, our growth at group level accelerated by 1 point each quarter from 3% to 4% to 5% and nearly to 6%.”
Hieronimus picked up on the “unexpected” Q4 disruption in China travel retail. “It’s true that the last quarter was not what we expected. We actually piped a number of our launches, Helena Rubinstein to name one, in Q3, which was positive for us in invoicing. “And if I look at Q4, as you’ve heard, the Sunrise app – the main app that’s duty paid within Mainland China – was closed for various reasons. And then there were also changes in operators in Beijing and Shanghai that reduced the sell-out and led to destocking. “If I look at our performance in Q4, we had a mid-teens negative in sell-in, and we had quasi flat – I think it was -1% – in sell-out for Q4. So we really avoided to have an inventory pile-up and end the year with a healthy inventory.” Hieronimus said L’Oréal hopes the Mainland China travel retail sector will be “flattish” going forward in 2026. “And, of course, we’ve been gaining share, 260 basis points, and we intend to continue to do so. So it was more an invoicing sell-in issue than a sell-out issue for us. It did clearly impact the North Asia Q4… but I think that’s a temporary disruption.” |
Earlier, in an official statement, Hieronimus said: “2025 was a defining year for L’Oréal: we delivered strong results regardless of the context, while profoundly transforming the Group.
“As we had promised, organic top-line growth accelerated quarter after quarter, boosted by the step-up in our launch plan and supported by a gradually improving beauty market. At +4%, L’Oréal grew once again ahead of the market; a key highlight was the strong second-half recovery in our two largest countries, the USA and China, while we continued our Emerging [markets] conquest.”
On an earnings call, L’Oréal Luxe President Cyril Chapuy pointed out that excluding travel retail Asia – “still in reset mode” – the market remained dynamic at +3%, driven by couture and premium segments.
“In China, the market pivoted back to growth. Following a negative 2024, it accelerated strongly during the year to close full year ’25 at +3% and we reinforced our very strong dominance there in China with an impressive market share of around 30%.
“Thanks to China and a healthy management of travel retail, we achieved a key milestone in North Asia. We became the region’s #1 luxury player for the very first time in our history. Within a still declining market, our performance remained stable, and we captured significant share.” {Main story continues beneath the following panel}
Earnings call highlights (2)Skincare woes slow AsiaHieronimus said a disappointing global performance in skincare was reflected in the Asian figures. “There’s one thing I’m not happy about – skincare. We’ve been really outpacing this market for eight years. That hasn’t been the case in 2025.” The reasons for such sluggishness were twofold, he explained. The first being the proliferation of Indie brands “that come and go”, the second a lack of innovation in the category by the company. “Skincare is the biggest category in Asia,” Hieronimus continued. “If I look at the Chinese ecosystem [both travel retail and domestic] … overall, it’s been improving month after month.” Has Asia travel retail “hit the bottom”?“We had this travel retail disruption in December. But we feel that, first of all – and that’s the most important thing for us – China is back to positive territory and also back to a positive luxury consumption because there was a moment when consumers were buying more mass products.” In a key observation, Hieronimus said: “In travel retail I believe we’ve hit the bottom. Now a lot of the downtown stores have closed, which was a big drag on 2025. Airports have been progressing. Traffic has been progressing and is back to levels that are at the level in North Asia of 2019. “And therefore, we’ll go back to what travel retail used to be, which is people buying gifts in airports at a good price. So with all this put together, we’ve set ourselves a growth ambition in this part of the world, and it will be driven by all divisions but by more premium products. “A brand like SkinCeuticals is flying in China, too. So it’s all this that makes me, without being crazy, still ambitious for a positive year in North Asia.” |
“We delivered another year of record gross and operating margins as our focus on efficiency gains allowed us to offset adverse currency and tariff trends.
“At the same time, we made L’Oréal stronger than ever through our transformation. We continued to advance on AI, strengthen our R&I capabilities and implement our IT transformation. And we embarked on our most strategic and transformational M&A offensive to date: Kering Beauté will further bolster our leadership in luxury beauty, adding highly desirable brands with significant growth potential.
“The increase in our stake in Galderma will allow L’Oréal to take part in the fast-growing market of aesthetics, a key adjacency to our beauty business.
“This transformation opens new growth opportunities, and we are set up for further acceleration. In 2026, despite the macro uncertainties, we are optimistic about the outlook for the global beauty market, and confident in our ability to keep outperforming it thanks to L’Oréal’s multi-division category strategy and to achieve another year of growth in sales and profit.” ✈
