By Astrid Wendlandt
PARIS, July 17 (Reuters) - L'Oreal , the world's biggest beauty group, on Thursday blamed a slowdown in Western Europe for its lowered forecast of annual growth and its below-forecast second-quarter sales.
"There is a difference between what we thought we would achieve and what we did actually achieve and this is due to the end results in Western Europe," L'Oreal Chief Executive Jean-Paul Agon told a conference call with analysts.
Analysts said the forecast cut and the disappointing sales figures were a sign L'Oreal was getting hit by a consumer downturn in Western Europe and North America.
L'Oreal cut its 2008 annual revenue growth target to around 6 percent from a previous target of 6 to 8 percent and made analysts feel that even 6 percent could be ambitious.
"We sense that even this objective of 6 percent will be difficult to meet," one Paris-based analyst said.
"They are trying to lower expectations," he added.
The Paris group behind Lancome make-up and Biotherm creams said retailers were holding back on purchases and trading proved particularly tough in cosmetics and luxury items such as Ralph Lauren and Armani perfumes.
"During the first half of 2008, we have not won market share in luxury and cosmetics products," Agon said.
"We cannot win market share all the time," he added, explaining that part of the problem was that some product launches had been postponed to the second half.
He also said the group's luxury business had suffered from department stores launching promotions that were "a bit excessive."
But Agon said he expected sales growth to accelerate in the second half.
L'Oreal made revenues of 4.287 billion euros ($6.80 billion) in the three months to June 30, undershooting expectations of 4.342 billion based on the mean average of nine forecasts compiled by Reuters Estimates.
Second-quarter sales in Western Europe fell 1.3 percent on a reported basis but they were up 0.4 percent on a like-for-like basis.
In North America, they dropped 5.8 percent during the period on a reported basis but a change in computer systems boosted revenues on a like-for-like basis and they were up 3 percent. Agon said North American sales growth would have been flat without the makeover.
Revenues in the rest of the world were up 9.8 percent on a reported basis and 14.8 percent on a like-for-like basis. (Editing by Rory Channing; Editing by Gary Hill)