Hello, and welcome to the L'Oréal Nine Months 2023 Sales Call. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. Please note, this call is being recorded. Today, I'm pleased to present Françoise Lauvin. Please begin your meeting.
Thank you. Good evening. [Foreign language] . Welcome to this conference call for the release of L'Oréal sales at the end of September 2023. On behalf of L'Oréal, I'm pleased to welcome today Chief Executive Officer, Nicolas Hieronimus.
Good afternoon.
Chief Financial Officer, Christophe Babule.
Hello.
Global Head of Corporate Finance and Financial Communication, Laurent Schmitt.
Good afternoon.
Of course, Eva Quiroga, Director of Investor Relations.
Good afternoon.
We hope you received and reread our press release, which was sent out a short while ago. Let me briefly share with you the highlights of this release before we move to the Q&A session. At the end of September, sales increased 9.4% to EUR 30.57 billion. The change in scope of consolidation was positive by 1.4%. It is mainly due to the acquisition of SkinBetter Science in October last year, and to the impact of hyperinflation accounting in Argentina and Turkey, to which one should add the acquisition of Aēsop on August 30th. Foreign exchange impact was negative by -4.6%, as all major currencies, but the Mexican peso, were down or at best stable against the euro. On a like-for-like basis, growth came to a strong 12.6%.
Turning to third quarter figures, sales increased 4.5% to slightly above EUR 10 billion. The change in scope of consolidation was positive by 2.4%, mainly due to Aēsop, and currencies had a usually negative impact of -9%. Q3 was another quarter of double digit like-for-like growth at +11.1%. Looking at our track record versus 2019, with growth, with a CAGR above 8% in the third quarter and the nine months, a truly remarkable performance among our peers. And at the end of September, on a like-for-like basis, Consumer Products and Dermatological Beauty both posted outstanding performance, with growth of +14.5% and +28.7%. Sales of the Professional Products Division accelerated in Q3 to 8% growth over nine months, and L'Oréal Luxe sales increased 6.1%.
All regions posted double-digit growth except North Asia. In Europe, momentum remained very strong, with growth +17.6%. In North America, sales advanced 12.6%. With growth of +23.6% in SAPMENA-SSA and +24.4% in Latin America. The continued remarkable outperformance of L'Oréal in mainland China was by the Asian country, both came to +1.3%. For the end of the year, extrapolating end-of-September currency rates until year-end at EUR 1 around $1.06, would lead to a Forex impact of -4.7% over full-year sales. With regard to changes in the scope of consolidation, the impact is likely to be positive to the tune of +1.8% over full year.
In conclusion, we are conscious of the economic and geopolitical uncertainties. However, the strong performance, both in the third quarter and over the first nine months, gives us confidence that we'll continue to outperform a dynamic beauty market and to achieve, in 2023, another year of growth in sales and profit. On a more personal note, this is my last conference call. It has been an exciting and fascinating 14-year journey in such a thriving company that is constantly reinventing itself. I wish to thank all amazing L'Oréalians for their patience and passion. They have all helped build and relentlessly raise L'Oréal's profile within the global financial community. I also wish to thank you, who are listening to this call, for our sometimes challenging, yet always enjoyable conversations, our memorable interactions, and above all, your unwavering support.
I'm very pleased to hand over the keys to Eva Quiroga, whom many of you already know. I have no doubt that you will be in very good hands, and I'm sure that everything is in place for her, together with all the team, to drive the group to new heights. I thank you for your attention, and we will be taking your questions.
Well, first of all, a few words. First of all, I'd like to thank Françoise also for her incredible contribution. We're going to try to make this call, you know, live up to your expectations as your last call. Before answering your questions, maybe just a few words of introduction, which will be consistent with what I wrote in the press release. But I have to say that I'm very pleased with the results of our last quarter as well as the year to date. The beauty market remains very dynamic. We estimate its growth at circa 9% after nine months. So it demonstrates its incredible resilience considering the context, and more importantly.
I would say once again, L'Oréal demonstrates its capacity to overperform at 1.3x the market year-to-date, to gain share, and more importantly, demonstrate its capacity to compensate or offset temporary pockets of weakness, thanks to its balanced footprint in terms of regions, of divisions, and its agility to reallocate resources where ascending currents are the strongest. That's what allowed us to, you know, to have this +11.1 Q3, to stay on course with this, as announced, +8%, over +8% CAGR over four years, quarter- after- quarter. And we're going to discuss the highlights of this quarter. Of course, there's incredible performance of CPD, record, record growth over nine months. You know, we don't have higher growth in record.
L'Oréal Dermatological Beauty, which continues to thrive at +28%. And as far as regions are concerned, it's true that all regions kept the pace they had on the first half, except one, which we had announced, and we, I guess we will discuss, which is Travel Retail Asia. But overall, as we titled the press release, L'Oréal stays its course to deliver another year of overperformance and of growth in sales and profits, pending all the uncertainties of this world. But we feel confident about the remaining part of this year. So, thank you, and we are ready for your questions.
Thank you. Ladies and gentlemen, if you do wish to to ask an audio question, please press star one one on your telephone keypad now. Once again, that is star one one on your telephone keypad to register for any questions. One moment while we open the line for the first question. Our first question comes from the line of Guillaume Delmas from UBS. Please go ahead. Your line is now open.
Thank you very much, and good evening, all. Well, first of all, Françoise, big, big thank you for all your help. And I think, you know, in dealing with me, all your patience over the years. So, thank you very much. And, of course, congrats to Eva. So two questions for me, please. The first one on China, I mean, maybe if you can provide a bit more granularity on your performance there, because it seems you're doing very well in mainland. It's a soft market, but you're doing well. But at the same time, you're also facing this Travel Retail reset.
And on this, I mean, do you have good visibility on how long is it going to last, and whether the peak of this adjustment is now behind you or not? And I guess, looking at Q4, how should we think about the upcoming 11-11 festival? And then the second question [crosstalk] on one topic.
You have a second topic?
Second topic, I mean, actually, like, it's a highlight, North America, because there's been a sequential acceleration of already quite strong base in the quarter. So, any light you can shed on the drivers behind this strong performance, and I guess, should we see your Q3 growth in North America as a clear clear evidence that you are not seeing any signs of changing consumer behavior, so no trading down or consumers going less to hair salons? Thank you very much.
Okay. So, let's take, let's try to take things one after the other. On the Chinese market, indeed, I think they're, y ou know, I've just come back from China, and the two things I can say is that I was not super impressed by the market, but I was super impressed by the L'Oréal teams and the performance. I mean, the market is, as everybody says, a bit slow to recover. It's flattish after nine months. But L'Oréal continues to really outperform. We have a 10-point gap with the market.
We're gaining share in all divisions, and that's really the result of a great online activity, good offline comeback on a market where consumers are still, you know, a bit shy in their spending. But we are achieving record shares. I'm thinking about L'Oréal Luxe in particular, where we are at a 33% market share lately, and that's really kudos to the teams, to the performance of our existing brands. Of course, Lancôme, L'Oréal Paris, YSL that have continued to perform very well, SkinCeuticals. But also the first contributions of new brands like Takami, like Prada, which we've just launched in China. We also have a very solid performance of Helena Rubinstein, so everything premium in skincare continues to do great.
So it's the market is a bit soft, but I have to say that our teams are really on the attack and gaining share. So that's the picture of China. As far as Double 11 is concerned, it's too soon to tell, obviously, because the pre-sales are starting in late October, so we'll see. My take on this at this point is what I see in the Chinese consumption patterns since the beginning of the year, is that the shy consumers are less shy.
Whether it's during Valentine's Day, whether it's 618, the market has had its best peaks of growth during this month, as if, I would say, the consumers were waiting for the moments when there are promotions or new offers to build their own inventory. So, usually we do overperform on these big events. So, frankly, I have lots of hopes for Double 11, but it's too soon to tell. But usually, and so far, as we've seen this year, events have been successful, and we've been overperforming on these events. So that's my answer to the second point on China.
And as far as travel retail, I think it's like in the last call, I had announced that, you know, following the reset of the policy regarding travel retail and the crackdown on Daigou, the market has very significantly reduced its sellout, slowed down. And because it's a new consumption paradigm, we have inventory to reduce, and we've been focusing over the summer in reducing significantly our stock in trade. We've actually gained a little bit of share in sellout, but it's in a lower sellout.
So what I would say on the travel retail impact on our business is that, one, it's circumscribed, it's limited to travel retail Asia, and even within travel retail Asia, it's limited to Hainan and Korea, which together are weighing a bit less than 5% of the L'Oréal Group's turnover, which means that it's limited, so circumscribed, limited, and temporary. So as far as your question on, about how long will it take, I think the inventory reduction will probably last until the end of the year. And that will set us up for a better pattern in 2024, particularly, of course, in the second half of the year. So that's globally the picture of China.
Clearly, we are all still, you know, very ambitious for this country because we have many cities to conquer. We're opening new cities this year, but we have a very ambitious plan for next year. It's important to remind that in China, our brands are not totally fully distributed. And we have only the top brands that are, like L'Oréal Paris and Lancôme, who are in 160 cities. But a lot of other brands can open new doors, including Lancôme.
So we remain, of course, we'd like the market to be more dynamic, but, what we've proven so far is that, we don't need the market to grow, and that's what we intend to continue to do. As far as North America is concerned, I must say indeed, that I'm pleased with the results of the team. And to answer your question in terms of seeing signs of reduction of consumers' appetite for beauty, we don't see major decelerations. We see small decelerations here and there, but overall it remains very dynamic, and we continue to see our growth in all four divisions being very positive.
So, again, the confidence is high. We're into the holiday season in North America, and holiday season is fragrance season. And it's true that in our L'Oréal Luxe business today, the one part of the catalog that is most performing is fragrance. So we are ambitious for the end of the year.
Thank you very much.
Thank you, and one moment please, while we take the next question. Our next question comes from the line of Celine Pannuti from JP Morgan. Please go ahead. The line is now open.
Thank you very much, and good evening, everyone. My first question is maybe to come back on that developed market performance, which clearly was quite strong, both in North America and Europe. So obviously, these are two different regions, but could we, maybe if I take one by one, understand what happened in North America in terms of that performance, especially in the two sellouts market gains, and if you could give us a bit more granularity in terms of the division performance for North America? And, you know, I would say Europe, if you could as well call out what has driven that strong number.
I mean, I know it was already 20% in Q1, but still remaining quite strong, despite the comp that you had called out, by the way, on the higher pricing in the second half of the year. So that would be my first question. And just maybe if I could add as well, a second question on China, Mainland. I guess from what you said in March, that China growth was about 5%-6% in the third quarter in the Mainland. Is that more or less correct? And you said that you outgrow the market, so what is the market growth? And what do you think, i f you could tell us what has been the difference in market growth between mass market and luxury in Mainland, please. Thank you.
Okay. So, let's take them one after the other. So first, North America, I'll get back to this. So the market in North America remains very dynamic over nine months, and it's particularly driven by makeup and fragrances, but good contributions, which are both growing double-digit market level, and good contribution from skincare and hair. And we have had a strong performance across all four divisions. So just to give you more granularity, as you said, Dermatological Beauty is in the high 20s% in growth, luxury is in mid-teens%. Prof, the mass market is in a very high single digits, and professional is in mid-single digits. So we have actually three divisions that are, I would say, close.
If, if CPD is so close to a double digits, we could almost consider it as such. So, so all divisions are growing, and of course, it's a blend of innovation, of digital activation, of pricing, and it's true for all developed markets. I have to say that we didn't get the question, but it was mentioned in the press release, that overall, our third quarter growth remains with the same pattern in terms of volume, value, split. So we have slightly over a third of our growth coming from volume, which means that L'Oréal continues, despite valorization, continues to grow in units, and that's been a driver, of course, for the U.S., as it has been, and it is for Europe.
If I go back to the European market now, Europe is also, you know, very dynamic. It's a grand cru, as we say, great vintage, because it's very broad-based, the growth. So first of all, every quarter was up in strong double digits. Every country grew in double digits, of course, except Russia. And in most countries, we are well ahead of the market. And every division grew. Of course, it's led by the Dermatological Beauty and Consumer Products Division, but luxury is also growing at double digits. So, and in Q3, all divisions grew in double digits in Europe. So, that's it. It's positive.
Of course, there is a price effect like in North America, which in both cases is going to progressively level off as we enter the comparative of last year's price increases. But what's important is that volumes remained positive in every quarter. So even though in some markets in Europe, volumes are decreasing a bit, but we continue to be our, you know, our consumers, which are upper middle-class consumers in most cases, are attracted to our products, to our and to our innovations. So that's the situation in Europe. And Christophe wants to add something.
I would add, in fact, because it was part of your question, Celine, the constituent of the growth is the same as the whole group. So, we have more than 1/3 is volume, which is quite incredible for Europe. 1/3 is v olume, a little bit more than, more than 1/3, and the rest is value.
So, your other question was on the growth of [crosstalk].
China.
Mainland China.
China.
As we said, China has been growing at +7.7 in Q3. On the-
It was Q3.
On the market, that was, year to date, it was [crosstalk].
Year to date.
It was flat.
Year-to-date, China is at 7.7.
Yeah.
Q3, the [given] is even higher, 7.9%.
Ah, sorry.
So, just to be.
7.9, and the market is flattish year to date. So end of summer was made of highs and lows. Bad July, great August, average September. So, it remains overall this kind of modest growth situation, which again, as you can see, does not prevent our brands from growing.
Meaning that, all the growth has been done on a gain of market share. What is even more remarkable is that this is going all four divisions in China.
Okay. Thank you. Just can you clarify the market to date, what it looks like in China in terms of market growth?
I'm trying to find that. The market is flat. The market is mid-single digits on the luxury, slightly negative on mass, mid-single digit on the [audio distortion].
Excellent. Thank you.
In each case, we are significantly above the market, with, of course, the biggest gap on dermatology and professional. But that's not unexpected. But luxury continues, as I said, to be really impressive in its capacity to gain share. So, again, kudos to the team there.
Thank you.
Merci, Celine.
Thank you, and one moment for our next question, please. Our next question comes from the line of Iain Simpson from Barclays. Please go ahead. Your line is now open.
Good afternoon, everyone, and I'm very sorry that this will be Françoise's last results call. As, like, everyone, I've hugely enjoyed our exchanges over the years, but I wish you all the best for the future.
Thank you.
A couple of questions from me. Firstly, would you be able to have a go at quantifying how much of the destock headwind in Asia travel retail, sort of, and we should expect a similar level of headwind in the Q4 before that kind of dropping out as we look into first half of next year? And secondly, just thinking a little bit about operational near-term dynamics in the U.S., some of the sort of scanner data there suggests a bit of a slowdown in the color cosmetics category through September and October. I just, if you see something in U.S. color cosmetics and how that trended through the Q3 and what the exit rate looked like, please. Thank you very much.
You want to take the de-stocking question, Christophe?
Yes. So if we look at the overall market, we see a market that is in the Q3 at roughly -12%. And of course, regarding our sellout, we've been following more or less the same. But we've been of course slowing down the selling, and this is to significantly reduce our level of stock. So this is already visible in end of September, and we do believe that we still have to do a part of the job in Q4. I don't have the precise figures of how much stock, but the objective is to come back to the normal level of stock at the end of this year.
So usually, in that kind of business, it's time between three to four months of stock, which is the regular level of stock. So this is our objective, to make sure that as soon as January first, if the market is up, of course, we'll be able to catch all the growth. So as usual, we adjust the stocks accordingly every quarter.
As far as the U.S. are concerned on the makeup market, actually, it's a bit the tale of two cities. 'Cause on the one hand, we've seen a slowdown of the mass makeup market in Q3, but, w e've seen also an acceleration of the luxury makeup market during the same quarter. So, it's, of course, it's very hard to predict looking ahead. But, and more importantly, we are, which is an area where we can improve, but we are progressively improving our performance in luxury makeup with a good comeback of Armani, good results of YSL, and very good performance of Lancôme on Amazon, which, as you know, we've opened Amazon for Lancôme.
It happens to be very successful, both in terms of sales, but also in terms of recruitment of new consumers, thanks to the media we are spending on the platform. So it's positive for the future of L'Oréal Luxe in North America.
Thank you very much.
Thank you, and one moment for our next question. Our next question comes from the line of Bruno Monteyne from Bernstein. Please go ahead. Your line is now open.
Good evening. Now, my first [crosstalk].
Good evening.
The question is about emerging markets, China. I think in the past, you sort of discussed how the e-commerce penetration is helping you grow quite fast there, driven by the brands in the consumer division, quite different from other regions. So you've been growing at 20% and more for quite a while now, and that region isn't that much smaller than China. So what I'm trying to lead up to, it's driving more growth than China, even if China was to normalize somewhat. Am I fair to expect that emerging market in China will be as big and bigger as a growth contribution for you than China will be? That's the first question, and the second question is, you were talking about the market growth trend in China mainland, and I was a bit confused.
I thought you said that premium beauty in the market, not for L'Oréal, was growing faster than mass market. Did I hear that correctly? Because most of the online data seem to suggest the opposite, that premium is declining versus mass market doing better. And is there any reason why e-commerce would be so different? Thank you.
Okay. So, the question on emerging markets, it's true that, frankly, the performance of our emerging markets is extremely strong. Both Latin America and SAPMENA, as I say, region are growing in the area of 24%. And there's a little bit of a race between the two to know who's gonna be the fastest for the year. And it's really, what I have to say, first of all, is the incredible resilience of these markets overall. They are growing double digits. As you know, we have said that both are in the 12% and 13% type of growth.
You know, we often get the question about whether we feel confident that is going to last. And I have to say that if there's one positive effect for some parts of the world, of the overall geopolitics, is for emerging markets. Because you see both India getting a lot of investment and developing its economy, and you see the market accelerating. And a country like Mexico is also booming and has a strong currency because a lot of, you know, industries are being developed. There's lots of American investments in Mexico, and we see also Brazil benefiting from the ability to trade both with China and North America. So these markets, the economy overall and the consumptions are very solid.
It's true that, you know, at least in Southeast Asia, we are behind in terms of market share. Our market share in India is only 8%, when it's 15% at global level. So we are accelerating and growing very significantly with a growth of over 20% in India at the end of nine months. So as far as contribution to growth is concerned, yes, this year, considering the growth of the different regions and the impact of both travel retail and the slow market in China, the sum of the two emerging markets will be a biggest growth contributor to the group than North Asia.
But the biggest growth contributor to the group this year growth will also be Europe, which is something we are, very, happy about. And as far as your question on China, yes, the premium part of the market is the fastest growing year to date. But I think we have a significant contribution to that growth because we do animate the market with our innovations, with our new brands. And it's true also that, as you know, e-commerce is also, and the success of the big events, such as Six Eighteen or Valentine's Day, is always favoring first the big brands, which is why L'Oréal Paris is very successful too.
But also more premium products, because that's both more interesting for the algorithm of the platform, but also that's where the promotions have a, you know, more significant impact for the consumer. So we see, we see great results for Lancôme on the Super Brand Days or Six Eighteen. Same, same for Helena Rubinstein or YSL. And as I said, our two premium skincare brands in China, Takami, our Japanese skincare brand, and Helena Rubinstein, are having really spectacular growth in mainland China.
It's true in each of our divisions, because it's not only true for luxury, but the same for our PPD division.
Yeah.
Is skyrocketing or skin botanical for our dermatologist community?
Thank you.
In fact, the Chinese consumer has become. That's one of the things, the evolutions we see post-COVID, has become, I would say, even more pragmatic, even more demanding on the quality of the product, on the functional benefit, as they say, of the product. And so when you have, you know, brands or products that really do perform in terms of efficacy and also in terms of brand aspiration, they can thrive on the Chinese market.
Thank you. And our next question is coming from the line of Olivier Nicolai from Goldman Sachs. Please go ahead. Your line is now open.
Hi. Good evening, everyone, and thank you again, Françoise, for your help throughout all these years. Two questions, please. First of all, on Aēsop, I've been part of the L'Oréal family now for the last six weeks, so I know it's still early days, but it would be great to hear if you could give us your first, you know, impression of the brand and kind of the ambition for the brand. How quickly it could become a bigger brand, and when can we expect this EBIT margin, which on the numbers from the previous owner, were, was quite low, to be in line with the rest of L'Oréal Luxe? And then secondly, on Lancôme, in, in on Amazon, in the U.S., has been a tremendous success since the launch.
I was just wondering if it's a different consumer that you're recruiting there. Are you gaining share from other luxury brands, or are you actually pushing your mainstream consumer to, to pre-arrive to some extent? And would you consider doing the same thing in Europe, having a Lancôme being sold on Amazon, in, in the UK or in France or in the rest of Europe? Thank you.
Okay. So, Aēsop, so we've been trained by Aēsopians, who are the employees of Aēsop, to say that you have to say Aēsop and not Aēsop, which is a mistake I was making. So, I'm happy to share that with you.
Thank you.
Aside from that, first of all, the first impression, I will start with the numbers. In September, Aēsop did a +17 point something growth. So, it's a very good top line growth, first of all. Second, we met the teams, and we welcomed them, and we brought them in. We brought with us the CEO of Aēsop to our China trip, because obviously China is the number one growth opportunity for Aēsop. They have four stores in Shanghai, which are beautiful, but only four stores in Shanghai. So, you know, it's the very beginning.
We are about to work with them and to make them benefit from our clouds and from our R&D support. But frankly, this is the moment where we're getting to know the teams, but we are very frankly, very exciting about the prospect and about the growth opportunities. On the specific topic of profitability, first thing, two things to say. First, as we said, and it's important for me to remind it, is that, based on our, on the numbers we have, and we are still really fine-tuning them, but we know that Aēsop will have a 25 basis points dilution effect on the 12-year rolling period for the group. Or 12 months, sorry.
12-month period for the group. So, which is, something we have to take into account for next year. And overall, even though the objective is also to progressively improve this profitability, we must not forget that as it's a retail brand, the profitability is calculated on, you know, consumer pricing, consumer price, numbers, not on the wholesale, prices. So of course, in a percentage point, it's always going to be lower. But, considering the growth potential, I think it will be very, beneficial to, the earning per share of, of L'Oréal in the years to come. So, you know, just the beginning, and, I'm truly excited about it. We'll see, we'll see what, what happens next.
As far as Lancôme Amazon is concerned, it's true, it's great. It's a great start. By the way, what's interesting is that it's particularly good on makeup, where Lancôme probably a bit, a tiny bit more, you know, facilities in the environment of a Sephora to speak to its consumers. First of all, I want to say that there has been a fantastic work done by the American teams along with the brand team to create a shopping experience, which is truly worthy of the brand equity of Lancôme.
If you go to the Lancôme page on Amazon, you will see that it's really as good as our own, you know, D2C brand site. Regarding consumers, we see that the first numbers are that around 75% are new to the brand. So maybe they were buying somewhere where we did not compute them, but overall, I'm not sure the 75% is 100% accurate, but it's a good proxy of the fact that through a new distribution channel with a brand that's already quite known, you can truly reach new consumers and increase your penetration. It's good, it's good news.
And I think it's I can't say whether it's taking from other brands on Amazon, because not yet many luxury brands are present on Amazon. We have more, I would say, accessible luxury brands such as Urban Decay or Youth to the People right now. But I think for me it's more a penetration tool than necessarily you know, trying to steal from brand A or B. So very promising, and of course, we have to continue and to make sure that Lancôme continues to develop on this platform.
Thank you very much.
Thank you. And once again, ladies and gentlemen, if you would like to ask a question, it is star one one on your telephone keypad to register. That was star one one on your telephone keypad to register for a question. And our next question comes from the line of Ashley Wallace. Please go ahead. Your line is now open.
Hello. Thank you very much. I have three questions, please. The first one is a follow-up question on Asia Travel Retail. I guess the destocking in Korea started right at the beginning of the year, so four or five months ahead of Hainan. I was wondering if you feel that Korea Travel Retail has already ended its destocking, and if you can help us understand if you're seeing better trends, there or not? And, connected to that and with the Hainan weakness, can you help us understand the potential margin implication of the weakness in Asia Travel Retail on the second half, EBIT margin for the Lux division? My second question is actually on Europe. A little bit of a follow-up.
I know you've spent a bit of time on it, but in some other consumer categories like luxury and retail, we've already started to see signs of weakness playing out with the European local consumer. Obviously, you've had great Q3 results overall, but is there anything that worries you in the European market, for example, trends towards the end of September, signs of down trading or volume weakness? And then my third question is more of a modeling question. At the beginning of the call, I think Françoise mentioned an adjustment for hyperinflation. Can you explain a little bit what that means? Does it impact anything but the FX component, or do you make some type of an adjustment?
We'll start with the question with Christophe, and I'll move, and we'll deal with the other ones together.
I will start with the Travel Retail. I think your question was on the stocking in Korea. So I can tell you that here the level is very healthy, so there is no much stocking to do in that market. And regarding the Hainan impact, so just want to remind you that today, Hainan is around 2% of our sales. So maybe yes, for Lux, it's always more complicated because of the level of profits, but it's really manageable. So it's totally, I would say, even if it's, it will have a small impact, but totally manageable.
It will have an impact for luxury, but [crosstalk].
For luxury.
But for the group, we can manage.
Yes, absolutely.
That's in the end the principle of our, you know, compensation system between divisions, regions, that we can offset, as I said, temporary pockets of weakness. And it's true for top line, and it's of course true for profits. As far as Europe is concerned, you know, we don't see impact on ourselves. We don't see slowdown or trading down on ourselves. As I told you, all four divisions grew double digits in Q3. It's true that in some markets, you know, you see negative units, but not on our brand, because I think we have a very different profile of consumers.
It's fair to say that on some, I would say, lower end brand, there is, there is more reduction of consumption, including, some, you know, own labels. But, but we continue to grow in units, and, and we have, a good performance thanks to our innovations. You know, I, I think it's important to remind always that, beauty is an offer market. It's a market where, of course, some people buy basic product for just functional, results, but our consumers are looking for the best of beauty. And when I see the success and results of a brand like, the new hair color, Goods from Garnier, which is very premium, versus the market, of Bond Repair from Elsève, the new YSL fragrance, MYSLF from Yves Saint Laurent.
Kérastase shampoos, or Metal Detox from L'Oréal Professionnel, which are all, sophisticated, premium, high quality products. These are flying. So, there's there is a, I would say, a very specific situation where, you know, we manage to continue to grow in units and value, on the market. And you had a question on the hyperinflation?
On hyperinflation. Exactly, yes.
Yes. So well, it's a bit technical, but basically, the like-for-like are calculated in non-comparatives, which are restated to reflect the variation in purchasing power between prior year and the end of the latest reporting period. So, and the restatement, of course, goes into the scope impact, so that's why, the effect is reported there. Of course, happy to give you more details if you want.
I guess, like, so the impact is, s o if you, if you hadn't made this adjustment, the like for like would be better than what you've just reported at 11.1.
Okay. It's very simple. We have 0.5% is related to Argentina, and 0.2% is for Turkey. So it's around 0.8.
Okay, perfect.
Okay.
Thank you.
Thank you. And one moment, please, for our next question. And our next question comes from the line of Javier Escalante from Evercore. Please go ahead. Your line is now open.
Good evening, everyone. Goodbye, Françoise. Thank you very much. Welcome, Eva, Nicolas, Christophe. I hate to need to come back to China, but I'm a bit confused, and I thought that it was very helpful in July when you introduced this term of the China ecosystem.
Right.
If you can help us understand, you know, thinking of the ecosystem, how much of the market is e-commerce, how much is brick-and-mortar, and this Travel Retail, the e-com situation, how much would had been and, or was in the past, in whatever period you have the data readily available, and how you see that pie chart, say, 12 months from now?
So, it's a complicated question because I don't think I have the data to answer to you on the exact split between e-commerce, brick-and-mortar in the overall Chinese ecosystem, particularly considering the you know, the changes and evolutions in the travel retail market, where you have orders are being placed online and then taken physically. So it's hard to make that split. We can comment on the weight of e-commerce in the mainland China Chinese market, which Christophe is currently looking forward. If I go back to the ecosystem, we continue to see, as I said, different trends.
The Chinese market, where we are significantly gaining share on a muted market, that, as we said, at a +7.7% growth, and we clearly were above the market. In Hong Kong, the market has bounced back strongly because a lot of tourists have gone back to Hong Kong. So Hong Kong is growing very, very fast, and we are benefiting from that rebound, while being very, you know, careful about inventory levels. And as you know, Hainan is the opposite. The market is down double-digit negative because of the change in this paradigm of the reset we've been talking about.
Our own sellout is a bit better than this number, but as we are de-stocking, that's why our invoicing is much lower. But overall, if I take a total Chinese ecosystem, our sellouts, our sales to consumers, have been up high single digits. And in the market, as we said, is broadly stable overall, so substantially gaining market shares. And as far as the weight of e-commerce on the Chinese market is concerned, first of all, both channels are growing for L'Oréal, whereas at the market level, online is slightly positive, while offline remains slightly negative.
Yes, maybe on the [crosstalk] pure mainland China.
Go ahead.
We see online growing very strong for L'Oréal, so double-digit growth, and offline is also growing, but mid-single-digit.
A more strategic question, because you mentioned earlier, Nicolas, that something like everything premium in the skincare continues to be great.
Mm-hmm.
Right? And if there is something that is particular about China, is that these online promotions and Daigou, that basically it appears that it reaches a type of consumer that is probably not as wealthy and younger than the same products in the West.
Mm-hmm.
Do you think that that is a good long-term strategy? Meaning that once you, say, use Helena Rubinstein, you're not gonna go back to something that is less so, or the contrary, if the economy goes south, so basically you are gonna lose these aspirational shoppers. Any view when it comes to that?
Well, first of all, just to remind that our strategy in the Chinese ecosystem, first of all, has always been focus, privilege, and always favor mainland China. So, you know, Daigou is not a strategy. Daigou was a phenomenon that we had to live with, and we are very happy that it ends, and that the market goes back to normal. And of course, whether on the big events or during or when the Daigou phenomenon was prevalent, you have a number of consumers that benefit from the offers or from better prices to discover our brands.
That's why, by the way, why travel retail will always remain a very important channel for us, not just for promotions, but also because it showcases our brands in a way that, frankly, is absolutely second to none. So we do recruit consumers with our big events and with our travel retail activities. We also have consumers that stock up, that are already loyal consumers. So it's a good way. We, of course, continue to sell outside of the big events. And what we are not at all afraid of is people, you know, abandoning our brands. Because, you know, if that was the case, right now, we wouldn't see our most premium skincare brands growing faster.
Actually, people are striving for quality. They want quality, and Helena Rubinstein, I don't know if you've ever tried one of the creams, but it's the, frankly, it's the best anti-aging cream that we have in the group, and consumers love it. So today it's actually a bit more difficult for mid-market brands than for premium brands. So our strategy is to continue to allow people to try our brands, and the way to do it, as I said, will be also to open new city. I remind you, because that's information we share every now and then, but that our market share overall in China is extremely different between Tier 1 cities and Tier 3, 5 cities.
It's over 25% in Tier 1 cities, and it's below 10% in Tier 3 and 5. So right now, we see that we are opening new counters in Tier 3 cities and plus. That's where we're gonna gain the largest number of consumers. Again, today, we sell approximately to 100 million consumers in China out of an addressable target of 400 million. So, we have lots of people to reach. And, of course, one of the way to do it is through the big events you were talking about, but also opening doors, presenting the brands, in a very beautiful way in these new cities.
And what we see, that even in these Tier 4, 5 cities that we were serving already through e-commerce, could be Tmall on Double 11. When we open a counter or a boutique, it increases both the sales offline, of course, but also the sales online, because suddenly, consumers discover the quality of the brand. So, it's, I don't think there is any risk on the strategy because, Mainland China has always been our priority.
Thank you, Nicolas. That was my base assumption, that people, once people try the good stuff, they don't go back. Thank you very much.
Thank you. As we have no more questions registered, I now hand back to our speakers for any closing comments.
No, I think we are very, a gain, it was the last call for Françoise. She's, she was very moved. I can tell you, you cannot see her, but she was very moved by everybody's comments. So, I guess, maybe some of you will invite her for a cup of tea. And in the meantime, we do thank you for your questions and your attention and have a good evening.
Thank you.
This now concludes our conference call. Thank you all for attending. You may now disconnect.