02.05.09
The current state of economic affairs is showing its impact on the global prestige market, according to a recent report from NPD. Furthermore, financial standings for industry leaders like Elizabeth Arden and Estée Lauder are showing signs of slowing down, as seen in company financial reports.
For the second fiscal quarter ended Dec. 31, 2008, Elizabeth Arden reported net sales of $370 million, a decrease of 12.4% as compared to the prior fiscal year. For the six months ended Dec. 31, 2008, the company reported a 6% slip in net sales to $654.2 million.
E. Scott Beattie, Chairman, president and chief executive officer of Elizabeth Arden, commented, "Our results were at the high end of the revised guidance announced in January, and we are maintaining our outlook for the second half of our fiscal year and our original full fiscal year cash flow targets. While continuing to operate in a difficult economic environment, we are encouraged by the performance of our North American mass retail fragrance business, our new launches and the recently licensed Liz Claiborne fragrance brands.''
The company is maintaining its outlook provided in January 2009 and currently expects net sales to decrease by 1% to 3% for the second half of its fiscal year ending June 30, 2009, or to increase by 1.5% to 3.5% excluding an expected unfavorable impact of foreign currency, as compared to the second half of the prior fiscal year. This guidance assumes the anticipated contribution from the continued roll-out of the Liz Claiborne fragrances and the second half global launch of the new Elizabeth Arden fragrance, Pretty, and the comparatively weak third and fourth fiscal quarter performance in the prior year. For the full fiscal year ending June 30, 2009, Elizabeth Arden's guidance is for net sales to decline by 4% to 5%, or 1% to 2% excluding an expected unfavorable impact from foreign currency, as compared to the prior year period.
Meanwhile, another beauty giant, The Estée Lauder Companies Inc., posted grim results for its fiscal second quarter ended Dec. 31, 2008 and provided expectations for the remainder of fiscal 2009. The company also announced a new four-year strategy designed to drive sales and reduce costs by cutting its workforce, as previously reported by Happi.
Net sales for Estée Lauder's fiscal second quarter dropped 6% to $2.04 billion, while net earnings slipped 42% to $158.0 million, as compared with $224.4 million last year.
William P. Lauder, chief executive officer said, “The factors that impacted our second quarter results were challenging on multiple levels, and not different from what many other companies have experienced, especially those companies dependent on consumer spending. The current difficult environment, which is global in scale, is not expected to improve in the near term. This underscores how vital it is for us to execute on our long-term strategy, even as we address the short-term challenges. We are a profitable company with strong financial underpinnings. In this environment, we are more committed than ever to contain costs and protect our profits, while continuing to invest judiciously to achieve our long-term growth objectives.”
In skin care, sales were flat for the quarter. While several new and existing products aided net sales in the skin care category, they were not enough to offset the impact of the economic downturn as noted above. The company believes it gained global share in this category during the quarter in stores which carry its products. Sales increased double-digits in Asia/Pacific, reflecting that region’s focus on skin care products. Across each region, the recent launches of Perfectionist [CP+] Wrinkle Lifting Serum and the Time Zone line of moisturizing products by Estée Lauder, as well as Superdefense SPF 25 Age Defense Moisturizer and Moisture Surge Extended Thirst Relief from Clinique, contributed incremental sales. Operating income decreased, primarily reflecting lower results from certain of the company’s core brands.
Makeup sales increased mid-single digits in Asia/Pacific, while posting declines in the company's other regions. Core brands, as well as its makeup artist brands, reported an overall global sales decline during the quarter, and posted higher declines in international markets than domestically; while makeup artist brands experienced a larger portion of their sales shortfall in the Americas. The company believes its makeup artist brands gained share internationally within their distribution.
The lower makeup sales reflected declines across a broad range of products. However, positively affecting makeup sales were products such as the reformulated Superfit Makeup and recent launch of High Impact Lip Colour SPF 15 from Clinique, as well as Doublewear Light Stay-in-Place Makeup SPF 10 and TurboLash All Effects Motion Mascara by Estée Lauder. Incremental net sales from new international points of distribution also helped offset the decline in this category. Operating income decreased, primarily reflecting lower results from certain of the company’s core brands and makeup artist brands stemming from the lower sales.
Fragrance sales saw the sharpest decrease. During the quarter, the company was heavily challenged by economic and competitive pressures in this product category. The decrease was largely due to lower sales of designer fragrances. Also contributing to the decline were lower sales of certain Estée Lauder and Clinique fragrances. The recent successful launches of Sensuous by Estée Lauder and Hilfiger Men from Tommy Hilfiger, as well as the recent international introduction of DKNY Delicious Night, partially offset these declines. Fragrance operating results declined, primarily reflecting the lower sales noted above, partially offset by a reduction in selling, advertising, merchandising and sampling spending.
Sales in constant currency increased, benefiting from incremental sales of new products, such as Dry Remedy Shampoo and Conditioner from Aveda, an increase in points of distribution and the acquisition of an independent distribution. Partially offsetting these positives were the conclusion of a hotel amenities program and, to a lesser extent, a softer salon retail environment in the United States. Additionally, reported sales declined due to the impact of foreign currency translation. Hair care operating results increased sharply, primarily reflecting a favorable comparison to the prior-year period when the company made investments in new points of distribution and recorded higher intangible asset amortization resulting from the acquisition of the Ojon brand. These gains were partially offset by the current period decline in sales noted above.
For the six months ended Dec. 31, 2008, the company reported net sales of $3.94 billion - a 2% decrease from the comparable prior-year period. Excluding the impact of foreign currency translation, net sales increased 1%. Estée Lauder will implement a four-year financial plan, also says the report.
For the second fiscal quarter ended Dec. 31, 2008, Elizabeth Arden reported net sales of $370 million, a decrease of 12.4% as compared to the prior fiscal year. For the six months ended Dec. 31, 2008, the company reported a 6% slip in net sales to $654.2 million.
E. Scott Beattie, Chairman, president and chief executive officer of Elizabeth Arden, commented, "Our results were at the high end of the revised guidance announced in January, and we are maintaining our outlook for the second half of our fiscal year and our original full fiscal year cash flow targets. While continuing to operate in a difficult economic environment, we are encouraged by the performance of our North American mass retail fragrance business, our new launches and the recently licensed Liz Claiborne fragrance brands.''
The company is maintaining its outlook provided in January 2009 and currently expects net sales to decrease by 1% to 3% for the second half of its fiscal year ending June 30, 2009, or to increase by 1.5% to 3.5% excluding an expected unfavorable impact of foreign currency, as compared to the second half of the prior fiscal year. This guidance assumes the anticipated contribution from the continued roll-out of the Liz Claiborne fragrances and the second half global launch of the new Elizabeth Arden fragrance, Pretty, and the comparatively weak third and fourth fiscal quarter performance in the prior year. For the full fiscal year ending June 30, 2009, Elizabeth Arden's guidance is for net sales to decline by 4% to 5%, or 1% to 2% excluding an expected unfavorable impact from foreign currency, as compared to the prior year period.
Meanwhile, another beauty giant, The Estée Lauder Companies Inc., posted grim results for its fiscal second quarter ended Dec. 31, 2008 and provided expectations for the remainder of fiscal 2009. The company also announced a new four-year strategy designed to drive sales and reduce costs by cutting its workforce, as previously reported by Happi.
Net sales for Estée Lauder's fiscal second quarter dropped 6% to $2.04 billion, while net earnings slipped 42% to $158.0 million, as compared with $224.4 million last year.
William P. Lauder, chief executive officer said, “The factors that impacted our second quarter results were challenging on multiple levels, and not different from what many other companies have experienced, especially those companies dependent on consumer spending. The current difficult environment, which is global in scale, is not expected to improve in the near term. This underscores how vital it is for us to execute on our long-term strategy, even as we address the short-term challenges. We are a profitable company with strong financial underpinnings. In this environment, we are more committed than ever to contain costs and protect our profits, while continuing to invest judiciously to achieve our long-term growth objectives.”
In skin care, sales were flat for the quarter. While several new and existing products aided net sales in the skin care category, they were not enough to offset the impact of the economic downturn as noted above. The company believes it gained global share in this category during the quarter in stores which carry its products. Sales increased double-digits in Asia/Pacific, reflecting that region’s focus on skin care products. Across each region, the recent launches of Perfectionist [CP+] Wrinkle Lifting Serum and the Time Zone line of moisturizing products by Estée Lauder, as well as Superdefense SPF 25 Age Defense Moisturizer and Moisture Surge Extended Thirst Relief from Clinique, contributed incremental sales. Operating income decreased, primarily reflecting lower results from certain of the company’s core brands.
Makeup sales increased mid-single digits in Asia/Pacific, while posting declines in the company's other regions. Core brands, as well as its makeup artist brands, reported an overall global sales decline during the quarter, and posted higher declines in international markets than domestically; while makeup artist brands experienced a larger portion of their sales shortfall in the Americas. The company believes its makeup artist brands gained share internationally within their distribution.
The lower makeup sales reflected declines across a broad range of products. However, positively affecting makeup sales were products such as the reformulated Superfit Makeup and recent launch of High Impact Lip Colour SPF 15 from Clinique, as well as Doublewear Light Stay-in-Place Makeup SPF 10 and TurboLash All Effects Motion Mascara by Estée Lauder. Incremental net sales from new international points of distribution also helped offset the decline in this category. Operating income decreased, primarily reflecting lower results from certain of the company’s core brands and makeup artist brands stemming from the lower sales.
Fragrance sales saw the sharpest decrease. During the quarter, the company was heavily challenged by economic and competitive pressures in this product category. The decrease was largely due to lower sales of designer fragrances. Also contributing to the decline were lower sales of certain Estée Lauder and Clinique fragrances. The recent successful launches of Sensuous by Estée Lauder and Hilfiger Men from Tommy Hilfiger, as well as the recent international introduction of DKNY Delicious Night, partially offset these declines. Fragrance operating results declined, primarily reflecting the lower sales noted above, partially offset by a reduction in selling, advertising, merchandising and sampling spending.
Sales in constant currency increased, benefiting from incremental sales of new products, such as Dry Remedy Shampoo and Conditioner from Aveda, an increase in points of distribution and the acquisition of an independent distribution. Partially offsetting these positives were the conclusion of a hotel amenities program and, to a lesser extent, a softer salon retail environment in the United States. Additionally, reported sales declined due to the impact of foreign currency translation. Hair care operating results increased sharply, primarily reflecting a favorable comparison to the prior-year period when the company made investments in new points of distribution and recorded higher intangible asset amortization resulting from the acquisition of the Ojon brand. These gains were partially offset by the current period decline in sales noted above.
For the six months ended Dec. 31, 2008, the company reported net sales of $3.94 billion - a 2% decrease from the comparable prior-year period. Excluding the impact of foreign currency translation, net sales increased 1%. Estée Lauder will implement a four-year financial plan, also says the report.