Things don’t look pretty for L’Oréal. Not only was second-quarter sales growth below expectations, but forecasts for the year were trimmed to 6 per cent from 6-8 per cent. Pressured by a 36 per cent drop in the share price since the start of the year, management hopes emerging markets, which now contribute 80 per cent of sales growth, will provide a better second half. Asian sales expanded by 17 per cent quarter on quarter. Jean-Paul Agon, chief executive, is also banking on an upturn in North America. Perhaps. More likely is that he ends up disappointed on both counts. US sales growth of 3 per cent was largely due to stockbuilding. A temporary boost from tax rebates is failing to boost consumer confidence, now at a 27-year low. If emerging markets slow faster than anticipated, expect further downgrades for this former darling of the sector.

Post and read comments on this Lex