May 23, 2011
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L'Oreal luxury to outpace market in 2011

May 23, 2011

May 23 - L'Oreal's luxury cosmetics division should outpace the estimated growth in the global market of around 6 percent this year, the head of the unit said on Monday.

Make up brand Lancôme, owned by L'Oréal

"Our ambition is to do better than that and we will do better than that," Nicolas Hieronimus, managing director of L'Oreal's luxury products division, told the Reuters Global Luxury and Fashion Summit.

Despite growing worries about debt levels in Europe which could weigh on consumption, Hieronimus said he felt confident about his division's performance in the region.

"In Europe, economic indicators are a little better than expected, in France (for example), so we have reasons to be confident," Hieronimus told the summit, held at the Reuters office in Paris.

"I don't see any reason for the consumer environment to deteriorate in Europe."

L'Oreal is the world's biggest perfume maker and the second-largest provider of luxury skin care products behind U.S. rival Estee Lauder.

L'Oreal's luxury products include Yves Saint Laurent perfume and make-up, Lancome and Biotherm creams, Shu Uemura make-up, and Giorgio Armani, Cacharel and Ralph Lauren perfumes. The division accounts for about a quarter of L'Oreal group sales.

Hieronimus said Lancome was the best-selling luxury cosmetics brand in China, which would become L'Oreal's second-biggest market next year for luxury products, ahead of France and behind the United States.

The division's percentage revenue growth in China is in "good double digits," he said.

Some of the growth this year would be driven by product launches such as a new Lancome mascara this summer, a Lancome cream in the autumn and a new perfume called Tresor Midnight Rose, advertised by British actress Emma Watson.

The U.S. luxury cosmetics industry is also "dynamic," he said, adding that he aimed to beat the growth estimate of 5-6 percent for the market this year.

In the quarter to March, L'Oreal's luxury unit was the fastest growing within the group, with sales up 7.7 percent on a comparable basis and up 10.3 percent on a reported basis.

In 2010, the division's sales rose 7 percent on a comparable basis and 11.5 percent on a reported basis.

Earlier this month, Estee Lauder posted a forecast-beating rise in quarterly profit as sales jumped in all of its markets and the Japan earthquake and its aftermath had little immediate impact.

By Astrid Wendlandt and Pascale Denis
(Editing by James Regan)

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