The Estée Lauder Companies Inc. reported net sales of $3.56 billion for its first quarter ended September 30, 2020, a decrease of 9%, on a reported basis and in constant currency, from $3.90 billion in the prior-year period. The net sales decline was driven by some temporary retail store closures and lower foot traffic in open stores attributable to Covid-19, partially offset by strong growth online.
 
Fabrizio Freda, President and CEO said, “We are pleased with the stronger than expected start to our fiscal year amid this difficult moment as the global community continues to confront Covid-19. We delivered significant sequential improvement in net sales growth in every product category driven by progress around the world.”

Freda continued, “Asia/Pacific again excelled with double-digit year-over-year growth in mainland China. Travel retail was a stand-out performer as Chinese tourists were drawn to the growing duty-free shops in Hainan Island and purchase limits increased there.”
 
Segments
 
Skin care net sales grew across most regions, led by Estée Lauder and La Mer.
 
Makeup net sales declined at all brands except Too Faced, which delivered a small increase. The effects of Covid-19 continued to disproportionately impact makeup, particularly foundation and lip, and makeup sales continued to be soft in most markets.
 
Fragrance net sales decreased, primarily due to declines from Estée Lauder, Clinique, certain designer fragrances, Jo Malone London and Tom Ford due to the impacts of Covid-19. Certain luxury and artisanal fragrance brands grew during the quarter as retail stores opened and consumers were able to enjoy sensorial experiences in person. Targeted expanded consumer reach also contributed to growth at the artisanal fragrance brands.
 
Hair care net sales were flat, reflecting an increase at Aveda that was offset by a decline at Bumble and bumble driven by some temporary retail and salon closures during part of the quarter due to Covid-19.
 
Forecasts for the Future
 
Commenting further, Freda said, “Looking ahead, our focus, first and foremost, is still the safety and well-being of our employees and consumers. We remain mindful of the ongoing effects of Covid-19 on consumers, the retail sector and economies as well as geopolitical uncertainty.”

He continued, “We continue to expect our multiple engines of growth strategy to deliver sequentially improving sales growth each quarter in fiscal 2021, which we expect will build upon our estimated global prestige beauty share gains since the pandemic began. We are confident in the long-term growth opportunities for global prestige beauty and for the Company, reflected in our announcement today to raise our quarterly dividend by 10 percent.”
 
Given the uncertainty around the timing, speed and duration of the recovery from the adverse impacts of Covid-19, ELC is not providing specific sales and EPS guidance for the fiscal 2021 full year.