Strong Growth in Developing Markets Boosts L’Oréal’s Sales in 1Q; Shares Remain Fairly Valued
We’re maintaining our annual outlook for wide-moat L’Oréal, which calls for above 3% sales growth and operating margin around 18%, after reviewing the firm’s first-quarter results. As such, we don’t anticipate material changes to our EUR 170 fair value estimate, outside of adjustments for the time value of money. Like-for-like sales during the quarter grew nearly 7% (declining 1% on a reported basis due to foreign exchange headwinds), driven by growth in the active cosmetics (10% of sales) and L...L'Oreal acts as a holding company. Through its subsidiaries, Co. plays a strategic coordination role and scientific, industrial and marketing coordination role on a global basis. Co. develops, manufactures and commercializes products for Skin care, Hair care, Make-up, Perfumes, Toiletries and deodorants, and Oral cosmetics. Co. has three branches: Cosmetics, Body shop and Dermatology. Co.'s principal activities comprise four divisions: Professional Products, Consumer Products, L'Oreal Luxe and Active Cosmetics. The Body Shop branch offers various cosmetics and toiletry products. The Dermatology branch offers topical dermatology prescription, and corrective and aesthetic dermatology.
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