(Sharecast News) - Shares in L'Oreal fell sharply in early trading on Wednesday, after the French beauty giant posted a weaker-than-expected rise in third-quarter sales.
The firm, which on Sunday announced it was buying Kering's beauty business in a €4bn deal, said total sales came in at €10.33bn in the three months to September, a 4.2% increase on a like-for-like basis. However, analysts had been looking for growth of 4.9%.

On a reported basis, sales ticked 0.5% higher.

L'Oreal said it had seen growth across all divisions and regions, boosted by strong demand for its luxury brands in mainland China.

Underlying sales in north Asia rose by 4.7% to €1.95bn.

In Europe, its biggest market, sales rose 4.1% to €3.57bn. But they ticked up just 1.4% in North America to €2.97bn.

Nicolas Hieronimus, chief executive, said: "The recovery in our two largest markets - the US and mainland China - continued. In a solid market, Europe remained robust.

"The global beauty market remains dynamic, with a progressive improvement in luxury.

"As we head into the last quarter of the year, I am confident that we will continue to outperform the global beauty market and achieve another year of growth in sales and increase in our profitability."

However, RBC Capital Markets called the update "underwhelming".

It continued: "Third-quarter growth was an acceleration as promised, but not as much as we were hoping for. Professional remained a standout performance, but each of the other divisions came in below consensus.

"Improved momentum in North Asia was also not enough to offset weakness relative to expectations in the Americas."

Citi said: "The print falls short of a more bullish consensus, especially due to weaker than expected numbers in North and South America.

"That said, we would argue that this miss is not a sign of the deteriorating business model."

As at 0830 BST, the stock had shed 7%. The results were published after the market's close on Tuesday.

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