Beauty Industry

Skincare and Travel Retail Drive Q1 Sales at Lauder

Net sales rose to $3.52 billion, an 8% increase compared with the prior-year quarter.

November 1, 2018

Editor-in-Chief

The fiscal year is off to a strong start at The Estée Lauder Companies Inc. The global cosmetics marketer (which achieved the No. 3 slot on Beauty Packaging’s Top 20 Global Beauty Companies of 2017, FY 2018) reported strong financial results for its first quarter ended September 30, 2018. The company achieved net sales of $3.52 billion, an 8% increase compared with $3.27 billion in the prior-year quarter. The company posted net sales growth in nearly all product categories, geographic regions and channels. Excluding the impact of currency translation and the adoption of the new revenue recognition accounting standard (“ASC 606”), net sales increased 11%.

Fabrizio Freda, president and chief executive officer, said, “Our fiscal year is off to an excellent start. Our sales and earnings per share grew double digits, reflecting multiple engines of global growth throughout our product categories, brands, regions and channels. Our creative innovations and high-quality products resonated strongly. We attracted new consumers and increased engagement with existing ones through successful digital advertising and influencer activities.”

“Our top growth drivers were skin care globally, the Asia/Pacific region and emerging markets, the global online and travel retail channels, and most brands, including Estée Lauder, MžAžC, La Mer, Tom Ford and Origins. In addition, in the United States, excluding Bon-Ton closures, our performance among department stores turned positive,” said Freda.

He added, “We are operating in a challenging macro environment with many economic and geopolitical risks, but we are confident in the strength of our business strategy, the quality of our products, the desirability of our brands and our ability to execute with discipline and agility. With our strong first-quarter results and exciting upcoming launches and programs, we are raising our EPS guidance for the year.”

Here are a few highlights:

Skincare:

• Skin care net sales grew across most geographies, channels and brands, particularly in Asia, travel retail and online.

• Growth at La Mer, our luxury skin care brand, was broad-based, with net sales increasing across every region and channel, driven by higher net sales of existing products, incremental net sales from new product launches, including The Treatment Lotion Hydrating Mask, and expanded targeted consumer reach.
• Growth at the Estée Lauder brand reflected great innovation, including the launch of Advanced Night Repair Eye Supercharged Complex.

Makeup:

Tom Ford Beauty. These increases were partially offset by lower net sales for Clinique and Smashbox.
• MAC grew high-single digits, led by several launches, including shade extensions of its Studio Fix foundation and Powder Kiss lipstick, as part of its effort to focus on bigger innovations.
• Estée Lauder generated solid double-digit growth, driven by strength from its Double Wear line of products.
• Net sales from Tom Ford Beauty increased double-digits, primarily driven by its lip color and eye shadow franchises.

Fragrance:

• Increased net sales from Tom Ford Beauty reflected the continued success of Private Blend fragrances and the launch of Ombre Leather. Jo Malone London’s net sales increase primarily reflected the launch of Honeysuckle & Davana and expanded targeted consumer reach, including the brand’s opening on Tmall in China.
• Le Labo and By Kilian net sales benefitted from expanded targeted consumer reach. By Kilian’s growth was also driven by new launches.

Hair Care:

• Hair care net sales increased, primarily reflecting higher net sales from Aveda, due to continued growth from the Invati Advanced line of products and the launch of Cherry Almond Softening Shampoo and Conditioner.

Outlook for Fiscal 2019 Second Quarter and Full Year
The company says it continues to see strong consumer demand for its high-quality products and expects to continue to deliver growth at the high end of its long-term net sales and earnings per share growth targets. “We continue to expect global prestige beauty to grow 5% to 6% during the fiscal year. The company expects to grow ahead of the industry. However, they say they are “mindful of risks related to social and political issues, geopolitical tensions, regulatory matters, global security issues, currency volatility and economic challenges affecting consumer spending in certain countries and travel corridors.”

PHOTO: La Mer remains a key performer for The Estée Lauder Companies.