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L'Oréal Q1'20 sales fall 4.8% YOY, but China growth continues despite COVID-19

L'Oréal SA on April 16 said like-for-like sales in the first quarter of 2020 fell 4.8% year over year but sounded optimistic that it could swiftly overcome the disruption caused by the coronavirus pandemic.

Group sales for the three months to March 31 dropped to €7.23 billion from €7.55 billion in the year-ago period, down 4.8% on a like-for-like basis and 4.3% on a reported basis. Though revenue fell across most business segments and geographies, the skin care company said sales in China rose 6.4% in the first quarter, despite the country being the first to be hit by the virus.

"In an environment that is evolving every day, lockdown measures will clearly continue to have a significant impact on the consumption of skincare and beauty products, and consequently on our business in the second quarter," said Chairman and CEO Jean-Paul Agon.

"However, as the example of China has shown, the current situation does not call into question consumers' strong appetite for beauty products, which remains intact. The market should recover quickly as soon as measures to close sales outlets are lifted."

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

The performance in China was driven by a strong lead-up to the Lunar New Year holiday in January and a return to growth in March, aided by tie-ins with the Women's Day Festival on March 8. During store closures in February, L'Oréal employed strict safety measures, pivoted toward more online activities and was able to quickly resume operations.

The growth in China could not offset a 3.7% year-over-year decline in revenue for the broader Asia-Pacific region. All geographies reported declining sales, led by Western Europe, which was 7.7% lower than in the first quarter of 2019.

Sales fell in the company's professional products, consumer products and L'Oréal Luxe divisions. L'Oréal's active cosmetics unit, which includes dermatological brands such as CeraVe and La Roche-Posay that are largely sold via drugstores, recorded a 13.2% like-for-like increase in sales.

The company said its travel retail division was particularly badly affected and recorded a double-digit decrease in sales. E-commerce sales rose 52.6% in the quarter.

L'Oréal said 28 of its 39 factories are working to produce more than 14 million units of hand sanitizer gel by the end of May. The company has committed to maintaining jobs and salaries for all staff and not furloughing workers in France through June.