Beauty Industry

Skin Care Helps Estee Lauder Turn 4Q Profit

Full-year net income doubled as revenue rose 6 percent.

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By: Jamie Matusow

Editor-in-Chief

Better sales of higher-priced skin care products such as a Clinique skin-tone corrector helped cosmetics maker Estee Lauder return a fourth-quarter profit, the company said Thursday.

Its full-year net income doubled as revenue rose 6 percent, but it said rising ad spending will cut into its first-quarter profit, and its shares dipped.

High U.S. unemployment and a shaky economy have hit cosmetics makers, and Estee Lauder is restructuring to cut costs. The company said the efforts, including reducing its offerings 10 percent this year, saved it $364 million in fiscal 2010.

CEO Fabrizio Freda said on a call with analysts that demand has been improving.

“In the last several months, prestige beauty sales in North America department stores have made significant improvements as consumer spending has picked up,” he said.

“When they can afford something, need something or are inspired by something, they are back buying,” Freda added in an interview with The Associated Press. “But consumer sentiment is still low, so I would define the U.S. consumer as improving but not yet back.”

In U.S. department and specialty stores, Estee Lauder’s Clinique and MAC brands and its luxury marks Bobbi Brown and La Mer all gained market share.

Driving growth in skin care were two recently launched products, Estee Lauder’s Advanced Night Repair face and eye serum and Clinique’s Even Better Clinical Dark Spot Corrector and Clinical Skin Tone Corrector.

Freda said Clinique skin-tone correcting products, which Estee Lauder has aggressively advertised, have attracted customers who typically buy skin products at drug stores and discount stores. Estee Lauder now plans to amp up advertising behind its biggest brands and improve the in-store customer experience for those brands.

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