The maker of Lancome lipstick, Biotherm creams and Garnier shampoos saw its second-quarter sales rise 4.6 percent, while analysts had expected a rise of between 5.5 and 6 percent.

"This is below my forecasts," said one analyst, who had expected a 6.2 percent rise in comparable second-quarter sales. He expressed concern regarding the major drop in sales in eastern Europe. "This is a significant emerging market for the group," he added.

Revenue from eastern Europe, which rose 0.7 percent in the first quarter, was down 8.2 percent in the second quarter to 325.3 million euros ($463.6 million) on a reported basis.

"After several years of growth, the sales trend in eastern Europe is disappointing in all of the countries of this zone, particularly in Russia and Ukraine," L'Oreal said.

Revenue in North America, L'Oreal's biggest market, fell 4.9 percent on a reported basis, having grown 12 percent in the first quarter.

On a reported basis, the luxury division was the only one to generate growth in the second quarter, with sales up 3.8 percent, while revenues from professional products and consumer products were down 0.7 percent and 0.3 percent respectively.

By comparison, during the first quarter, luxury sales were up 10.3 percent, revenue from professional products was up 9.6 percent and from consumer products was up 9.4 percent.

The group, however, said it still aimed to raise profits and sales in 2011 and looked to the second half with confidence.

L'Oreal's revenue overall reached 4.99 billion euros in the quarter to June 30, up 0.9 percent on a reported basis.

by Kyiv Post.