Executive Summary

• On Friday, September 4, L’Oréal lowered its forecasted growth for the cosmetics category in 2015 to around 3.5%, down from its previous expectations of 3.5%–4%. That said, the company did not adjust its expectations for its own sales performance for the second half of the year.
• In its most recent update on July 30, L’Oréal said it had expected industry sales growth to accelerate in the back half of the year based on improved demand in Western Europe and the US. L’Oréal’s sales grew by 3.6% in the second quarter, excluding acquisitions, disposals and currency swings. Asia-Pacific sales grew by 4.1% in the period, slowing from 5.8% in the first quarter.
• The lowered expectations are due to the slowdown in China. We estimate that sales in China are down roughly 5%. The Asia-Pacific region represents 35% of global cosmetics sales, and is the largest market for the category.