France-based L'Oreal SA (
) is set to report first half fiscal 2014 sales results on Jul 31.
L'Oreal creates and develops various cosmetics products for women
and men worldwide. Let's see how things are shaping up prior to the
Factors to Consider
The cosmetic company reported dismal first quarter results
wherein sales declined 2.2% due to currency headwinds of 5%. The
company also decided to terminate the mail order business of Beauté
Créateurs during the first quarter, which had a slight negative
impact on sales.
However, on a currency-neutral basis sales increased 3.5%, of
which the total cosmetics division increased 3.7%. The Body Shop
sales declined 3.4% due to a difficult operating environment in
Asia and U.K. Region-wise, the company witnessed recovery in
Western Europe, while Southern Europe showed signs of improvement
for the first time since 2007. However, North America sales were
down 0.6% in the first quarter.
In the first half of 2014, the company continues to expect
currency headwinds to hurt the top line. It expects currency to
negatively impact sales by 4.3% in full year 2014. However, we are
optimistic on the company's newly-acquired businesses of Decléor
and Carita and Magic Holdings International Limited, which are
expected to add around 0.4% to the company's full-year sales.
The acquisition of Magic Holdings was L'Oréal's biggest
investment in the Chinese beauty market, which will strengthen its
leadership position in the world's third largest beauty market.
Also, Decléor's expertise in aromatherapy and Carita's legendary
products will contribute to L'Oréal brands.
L'Oreal has a Zacks Rank #4 (Sell).
Some other players in the cosmetic industry which are due to
report their quarterly results include Avon Products Inc. (
), The Estee Lauder Companies, Inc. (
) and Elizabeth Arden, Inc. (
). Avon is expected to release its results on Jul 31, while Estee
Lauder will report on Aug 15. Elizabeth Arden will come up with its
results on Aug 14.
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