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NEW YORK — The market reacted favorably to L’Oréal’s first-half 2025 results Wednesday, one day after their release, as chief executive officer Nicolas Hieronimus shared his outlook for the year, including the possible impact of U.S. tariffs.
The maker of Lancôme, Garnier and La Roche-Posay products’ stock closed up 4 percent Wednesday to 388.55 euros.
Hieronimus discussed the recent U.S.-European Union tariff agreement, involving the U.S. imposing a 15 percent tariff on beauty imports from the EU.
“I cannot give you a definite number for the impact tariffs will have on our margins, since we are still missing certain elements,” said Hieronimus. “What I can tell you, however, is that it will be manageable.”
The group currently expects the impact could be less than 40 basis points.
“Our 36 factories and more than 150 distribution centers around the world give us significant flexibility, as most of the units we sell are manufactured where we sell them,” said Hieronimus. “The one exception are luxury fragrances, which are made in Europe. We have ensured that we have built sufficient inventory, and we consider raising prices to offset at least part of the tariff impact.”
When asked by an analyst about whether L’Oréal would expect a hit from tariffs starting in the fourth quarter of this year or next year, and what the group can do to mitigate the impact on the 30 percent of its products imported from Europe and sold in the U.S., Christophe Babule, the group’s chief financial officer, said: “There have been some divisions that have been already planning for a tariff increase in the second half.
“This also will help on the P&L this year,” he explained. “What is important is already to foresee what will be the impact on 2026, and here we have different initiatives, mainly in operations, to see on some categories — we’re thinking of perfume, for example — what can be done to mitigate those tariffs on the long term.”
Hieronimus said that looking at the midterm, L’Oréal is watching for the dust to settle, as there are other bilateral discussions ongoing.
“We are waiting to have the clear picture, to see whether we need to make any production moves from here to there, and a few other mitigations,” he said. “I am not giving up on trying to convince the European authorities to negotiate some exemptions for cosmetics. Who knows? You have to try.”
Referring to beauty market growth for 2025, Hieronimus said it has been gradually accelerating, as foreseen.
“In the first half, the market advanced slightly more than 3 percent, implying a clear acceleration from the first quarter at slightly over 2 percent,” he said. “This acceleration was broad-based across all regions.
“Most remarkable was North America, as the U.S. improved significantly after a challenging start of the year,” said Hieronimus. “In mainland China, market growth was broadly flat, a significant improvement from the 4 percent decline last year. But what is even more important is that luxury started to outperform mass, which is obviously helpful given our footprint.”
The executive said emerging markets remain dynamic, growing by double digits.
Nicolas Hieronimus
Courtesy of Stephane de Bourgies / L’Oréal
“In Europe, market growth remained solid, below last year’s level, which was boosted by pricing,” he said.
As previously reported, in the first half, L’Oréál’s sales came in at 22.47 billion euros, up 1.6 percent on a reported basis and 3 percent in like-for-like terms. The results, net of the impact of phasing related to the company’s IT transformation, had the group outperforming the beauty market in three out of its four divisions, including Luxe in all regions and across all categories, especially fragrances, where it grew twice faster than the selective market.
Professional Products continued to develop multiple times faster than the market, driven by the ongoing boom in premium hair care.
“Our Kérastase billionaire brand grew in high teens,” said Hieronimus. “[Dermatological Beauty] was up against a particularly challenging comparison based on sell-in. Sell-out was significantly better and well above the dermocosmetics market at a [multiple] of 1.3 times.”
Consumer Products slightly underperformed the market.
“This was partly due to its unfavorable footprint as the division over-indexes in U.S. makeup, which remains soft and has no exposure to fragrances, the fastest-growing mass category,” said Hieronimus. “The division significantly outperformed the market in hair care and makeup. It showed encouraging trends in skin care in markets with a strong innovation lineup, like Latin America.
“We are reassured by the recent green shoots in the U.S., including makeup, where our innovation has started to kick in,” he said.
Emerging markets in the half accounted for 17 percent of L’Oréal’s overall sales and continue growing by double digits. Mexico, Brazil, India and Thailand were among the top 10 contributors to growth at a group level.
In North Asia, gains improved sequentially, with mainland China, which returned to positive growth for the first time in five quarters, as the key driver. (That market was particularly negative in third-quarter 2024, still negative in fourth-quarter 2024 and about flat in the first and second quarters of this year.) In mainland China, L’Oréal continued to outperform the stabilizing market.
“When it comes to travel retail here, the situation is still complex,” said Babule. “The market in Asia is still negative.”
Travel retail Asia is negative in the high teens, while in the channel there L’Oréal is negative in the low teens, therefore gaining share.
“It’s really a tale of two cities,” said Hieronimus. “Because you see, on the one hand, because the traffic is increasing the market in airports is overall very positive, like plus 8 [percent], and it’s very negative in what used to be called the downtown stores. [Those] had been open by many players back in the day, when there was less traveling and also were fueled by the daigou business.”
In Seoul, for instance, many such downtown stores are closing. In Paris, La Samaritaine has been reunited with Le Bon Marché department store by LVMH Moët Hennessy Louis Vuitton under a governance structure, as Chinese tourists are traveling less in groups. La Samaritaine had formerly been run by LVMH’s duty-free operator DFS.
From Garnier.
Courtesy
“We see that Hainan, despite being pretty heavy in traffic, remains very negative — in the minus 25-ish in terms of sell-out,” said Hieronimus, making reference to the tax-free Chinese island. “So we have a reconfiguration of travel retail back to what it was and should have remained, which is an individual traveler’s business opportunity and a brand exposure opportunity. Had it not been for travel retail, our North Asian business would have been positive for this first half.”
In America, adjusted growth accelerated in the second quarter, including promising signs for the Consumer Products and Dermatological Beauty divisions.
“In Europe, growth was ahead of the market in sell-out, with particularly strong performances in Luxe and Professional Products,” said Hieronimus. “What we have seen so far this year makes us confident that global beauty market growth will come in around 4 percent as we had predicted at the start of the year, despite the many economic and geopolitical uncertainties.
“We expect the market acceleration to continue, helped by an easier comparison base, as market growth slowed from 4.5 percent in the first half to 3.5 percent in the second half of last year,” he said. “The appetite for beauty has never been more dynamic. Today, over two-thirds of people around the world consider it important to look fit and attractive. That’s six points higher than just three years ago. This is a global trend.”
Social media conversations on beauty remain dynamic, too, with 6.5 billion beauty searches on TikTok in the first half, up more than 50 percent on-year.
“Last but not least, beauty market growth could be boosted by price increases related to the announced and pending tariff hikes,” said Hieronimus. “We have every ambition to outperform the market. Critically, our beauty stimulus plan will accelerate further in the second half. Our ambition is to increase the weight of new launches by more than 300 basis points versus last year.”
The executive underlined that in the last 12 to 18 months, the contribution from online to total beauty market sales has been accelerating.
“In the first half, online grew twice as fast as the market, and we are uniquely well-placed to benefit from this shift, given our long-standing investment in this channel,” said Hieronimus.
E-commerce generated almost 29 percent of L’Oréal sales in the half, more than two points above last year and grew in the low teens.
Hieronimus said he’s excited about L’Oréal’s prospects as the company continues to future-proof its business, including by adding highly complementary, fast-growing brands to its existing portfolio and innovation.
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