Shares in French cosmetics giant L’Oréal fell by more than 4% in early trade on Friday after the company posted its slowest quarterly sales since the height of the pandemic, dragged down by weak Chinese demand.

Trading 3.9% lower at 0808 GMT, L’Oréal was the second-biggest faller on European equity markets.

The 2.5% rise in fourth-quarter sales was a slowdown from the 3.4% rise in the third quarter, and the slowest quarterly growth since 2020. Analysts had expected quarterly sales to rise more than 4%.

Speaking to analysts on Friday, finance chief Christophe Babule said the Chinese market failed to stabilise towards the end of last year. Revenues in North Asia, which includes China, were down by 3.6%, after a 6.5% decline in the prior period.

Barclays analysts said weak sales in China and a slowdown in the company’s derma division were the main factors for the earnings miss.

“We think investors will remain nervous around whether this is symptomatic of deeper structural problems until growth inflects,” the note added.

Fourth-quarter sales also grew more slowly than expected in North America, rising by 1.4%, down from growth of 5.2% in the third quarter.

The Luxe division, which markets the Valentino and Yves Saint Laurent perfumes, also missed growth expectations by 4 percentage points.

Separately, L’Oréal said on Friday it struck a deal to produce beauty products for the popular French luxury fashion label Jacquemus in which the cosmetics maker would also take a minority stake.

CFO Babule on Friday said that proceeds from selling a stake in pharma company Sanofi would give L’Oréal additional financial firepower for acquisitions.