High-end beauty rebounds as L'Oréal's third-quarter sales exceed expectations

L'Oréal's growth is accelerating.

On October 22, L'Oréal announced its sales performance for the first three quarters of 2026. In the third quarter, sales reached €11.561 billion, an increase of 11.9% year-on-year, surpassing the market estimate of €11.23 billion. After excluding the effects of exchange rates, consolidation scope, and IT system transition timings, the adjusted comparable growth was 7.7%.

The market had already anticipated a recovery. In a research summary from UBS on October 12, the third quarter was seen as a key period to test whether L'Oréal could continue to achieve around 6% growth. The actual performance exceeded that level, providing further support for the view that growth is rebounding.

High-end cosmetics were an important source of the outperformance. This segment saw adjusted comparable growth of 7% in the third quarter, higher than the market forecast of 4.5%. According to Reuters, demand for perfumes and improved sales in China jointly drove the growth.

This means that L'Oréal is gaining growth momentum from sources beyond perfumes. In recent times, the company has sped up skincare innovation, aiming to boost the recovery of this key category. Brands such as Helena Rubinstein, SkinCeuticals, and La Roche-Posay have shown performance that reflects the improvement in demand for high-end and efficacy-driven skincare in the sales results.

Reuters quoted management as saying that Helena Rubinstein achieved high double-digit growth, and both SkinCeuticals and La Roche-Posay maintained double-digit growth.

China is an important market for observing this round of change. In the third quarter, L'Oréal's North Asia sales reached €2.229 billion, with comparable growth of 7.8%. The company stated that the Chinese market is still mainly driven by high-end beauty, with L'Oréal's local growth rate nearly three times the market average, and both online and offline channels maintaining growth. North Asia's travel retail also returned to positive growth in the third quarter.

However, this improvement cannot yet be equated with a full recovery of the entire beauty market.

L'Oréal CEO Nicolas Hieronimus stated at the results meeting that after two years of contraction, China's beauty market has returned to growth, but the third quarter saw a slightly slower pace due to a higher comparison base. Middle-class consumers are shifting some spending from entry-level luxury goods to high-end beauty, which provides an opportunity for the company.

L'Oréal is not relying solely on China for its recovery. In Europe, third quarter adjusted comparable growth reached 8.9%, while South Asia Pacific, Middle East, North Africa, and Sub-Saharan Africa grew by 19.5%, with strong demand in the Gulf countries and Vietnam. The collective growth across multiple markets has reduced the group's dependence on any single region.

Differences between business segments remain evident. In the third quarter, professional hairdressing and dermatological beauty both achieved adjusted comparable growth rates of 13.9%, while mass cosmetics reached 3.8%, down from 4.6% in the second quarter. High-end haircare and efficacy-driven skincare remain stronger, but mass-market businesses—targeting a broader consumer base—have yet to accelerate in step.

Latin America, however, revealed operational shortcomings. In this region, third quarter adjusted comparable sales declined by 3%, as Mexico's mass cosmetics business suffered from commercial execution issues, temporary supply chain disruptions in color cosmetics, and inventory adjustments by retailers.

Nicolas Hieronimus still expects L'Oréal's full-year sales and profits to continue to grow.

For L'Oréal, the recovery in high-end beauty has already delivered a revenue surprise. Whether the mass-market segment can keep pace will affect the sustainability of this round of recovery.