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French beauty company L’Oréal increased sales in the third quarter despite a more muted than expected recovery in China and a fall in travel retail in Asia.

Sales at the group, which owns brands ranging from Garnier to Lancôme, grew 11.1 per cent on a like-for-like basis in the most recent quarter ending on September 30, reaching a total of €10bn, just below consensus estimates cited by Barclays.

Strong growth in Europe and the US — L’Oréal’s biggest markets — largely offset a fall in sales of 4.8 per cent in north Asia, which frustrated expectations for a 14 per cent jump.

Sales in China rose 7.7 per cent despite “a muted recovery” in the beauty market, but they took a hit on travel retail because of Beijing’s crackdown on daigou — cross-border personal shoppers who purchase items abroad and then resell them for profit inside China.

Investors have been focused on how China’s slowing economy and property crisis will affect companies operating there. Following a recent trip to China, L’Oréal chief executive Nicolas Hieronimus said he “was not super impressed by the market [because] as everyone says it has been a bit slow to recover” from harsh Covid-19 lockdowns at the end of last year.

“While we wish the market in China was more dynamic, we’ve proven that we don’t need the market to grow,” Hieronimus said.

He added the hit to travel retail because of controls on daigou shoppers was limited to sales in Hainan and Korea, and that the process of reducing excess inventory, which has weighed on sales, should be completed by the end of the year.

The group beat expectations for third-quarter growth in its two biggest markets, Europe and North America, where they gained 16.2 per cent and 11.8 per cent, respectively.

Growth was slowest in L’Oréal’s luxury division, which improved 3.2 per cent. In the wake of luxury group LVMH’s results last week, this reflects a broader trend seen towards more normal levels of growth in top-tier product categories after several years of record sales.

“Whatever the drag of travel retail, L’Oréal maintains its organic growth,” wrote Bruno Monteyne at Bernstein. “Whilst that is a drag, all other divisions and regions made up for this . . . The ability to move growth around the group is clearly at work and shows how L’Oréal can continue to grow, even when a major part of its business is having a problem.”

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