L'Oreal Halts Deliveries Due to Nonpayments

PARIS -- L'Oreal has stopped shipping beauty products to major Russian retailer L'Etoile because of nonpayment, a blow to sales in one of its biggest growth markets, its head in Russia said Tuesday.

L'Etoile, which runs more than 500 boutiques across Russia, confirmed that it was in talks with L'Oreal over trying to obtain new terms and credit from the world's biggest cosmetics group.

Georges Chichmanov, L'Oreal general secretary in Russia, said the group had stopped supplying L'Etoile since the end of 2008 but it had not yet run out of products.

"We are in talks to try to unlock the situation," Chichmanov said. "Today, many Russian retailers are suffering from liquidity problems, and this of course could impact our sales," he said.

Analysts estimate that Russia represents 3 percent to 4 percent of L'Oreal's global sales.

Chichmanov said wholesale distributors and retailers were in effect trying to get their suppliers to provide the short-term financing they had previously obtained from the banks.

Kirill Muradov, general manager of L'Etoile, said L'Etoile was trying to renegotiate terms and obtain credit from most suppliers, which include France's LVMH and Procter & Gamble.