L’Oréal: Strong Sales Growth on Derma Skincare Strength, Despite Slow Asia Luxury Recovery  

Wide-moat L’Oreal posted a solid sales update for the first quarter, reaffirming our view on the global beauty maker’s long-term prospects underpinned by strong brands, innovation track record, and a balanced exposure to premium and mass segments. Revenue increased 9.4% like-for-like, driven by continued strength in derma skincare and successful product releases in premium hair care and high-end fragrances, and we think the firm remains on track to deliver a 7.4% sales expansion in 2024. We maintain our 10-year projection for high-single-digit annual sales growth and low 20s average operating margin and view shares as overvalued.