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Estée Lauder Posts Record Results for 2011

August 29, 2011

Estée Lauder Posts Record Results for 2011

• The Estée Lauder Companies Inc. reported record results for the fiscal year ended June 30, 2011. For the year, sales rose 13% to $8.81 billion. Excluding the impact of foreign currency translation, net sales increased 12% from a year ago. Net earnings for the year jumped to $700.8 million, compared with $478.3 million last year.

“Fiscal 2011 was an outstanding year for our company. We achieved record sales, gross margin, operating margin, earnings per share and operating cash flow,” said Fabrizio Freda, president and chief executive officer. “These results confirm that our strategy is working and has allowed us to reach our original 13% operating margin target two years earlier than anticipated. We are pleased that our performance is creating greater stockholder value, as evidenced by our increased market capitalization this past year.”

According to Freda, the company made significant progress executing its strategy and expects to continue to benefit from the many initiatives being implemented, along with a more strategically focused approach to spending.

“We had strong sales growth in every geographic region and product category, and notably, we recorded the best performance in North America in a decade, including excellent department store results,” he added. “Our company also established market leadership in China in prestige, and in the important fast growing travel retail channel the company became the leader in skin care.”

In fiscal 2012, Estée Lauder will continue to focus its creative ingenuity on the biggest product ideas and marketing opportunities, improve its high-touch services, aggressively pursue growth in emerging markets and distribution channels and invest in strategic modernization initiative.

“We have strong momentum that we will support with higher investment spending, and intend to continue to gain share globally and increase profitability,” he explained. “Based on our conviction in our strategy and long-term outlook, we are extending our financial goals to fiscal 2014 and raising our operating margin target to between 14.5% and 15%.”

The company said its record performance was due to stronger overall business, particularly from its largest brands, helped by a weaker US dollar. The company posted strong across-the-board sales gains in its geographic regions and major product categories. Sales also increased in all major product categories within each region. Sales growth was particularly strong in the US, travel retail and emerging markets. These results reflect solid increases from higher-margin product launches and the positive impact of more effective advertising spending. The higher results also reflect a favorable comparison to the prior year, which included a charge for returns related to the company’s long-term perfumery strategy in the Europe, the Middle East & Africa region of approximately $31 million.

Q2 Sales Jump More Than 9%For Colgate-Palmolive
• Second quarter net sales rose 9.5% to $4.2 billion at Colgate-Palmolive Company. Global unit volume grew 3.0%, pricing increased 0.5% and foreign exchange was positive 6.0%. Net income increased 3% to $622 million, while operating profit increased 2% to $968 million in second quarter 2011.

As previously announced, as part of its strategy to focus on its higher-margin oral care, personal care and pet nutrition businesses, on June 20, 2011 Colgate completed the purchase of the Sanex personal care brand from Unilever PLC for €672 million ($960 million). Sanex is a premium-priced personal care brand with a distinct positioning around healthy skin and strong market share positions in Europe.

Also as previously announced, in connection with the Sanex acquisition, Colgate agreed to sell its laundry detergent brands in Colombia to Unilever for approximately $215 million resulting in an aftertax gain of approximately $130 million.

The detergent sale recently received regulatory approval and was expected to close early in the third quarter. The company now expects that this gain will be fully offset in the second half of 2011 as a result of the implementation of various business realignment and other cost-saving initiatives, further driving improvements in effectiveness and efficiency globally.

Ian Cook, chairman, president and chief executive officer, commented, “We are pleased with our solid top and bottom line growth this quarter with worldwide net sales, operating profit, net income and diluted earnings per share all increasing versus year ago, despite very sharp increases in material costs, an intense competitive environment globally and challenging macroeconomic conditions, particularly in developed markets.

“Colgate’s global market shares in toothpaste and manual toothbrushes are both at record highs year to date. Colgate’s share of the global toothpaste market strengthened to 44.6% year to date,” Cook said.

Sales Surge 9% for Avon in Q2

• Avon Products, Inc. reported second quarter 2011 total revenue of $2.9 billion—9% higher than last year. Total units declined 3%, while price/mix rose 5% during the quarter. Active representatives were flat.

“Our first half 2011 results were in line with our expectations of low-single digit constant-dollar growth and adjusted operating margins flat with a year ago,” said Andrea Jung, Avon’s chairman and chief executive officer. “We continue to expect mid-single digit revenue growth in the second half of this year, driven by our major global field activation program around our 125th anniversary. We also continue to expect significant margin expansion in the second half, resulting from gross margin improvement and revenue leverage.”

Avon’s beauty sales increased 8%. On a reported basis, fragrance and personal care sales increased 11%, color rose 8% and skin care grew 3%.

However, second-quarter 2011 revenue in North America was down 7%, according to Avon. Latin America’s revenue was up 19% year over year, with continued strong growth in most large markets.

In Central & Eastern Europe, second-quarter revenue was up 5%. Western Europe, Middle East & Africa’s revenue increased 13%. Asia Pacific reported a decline of 5%, according to the company.

Ecolab’s Q2 Sales Rise 12%
• Ecolab Inc. reported a strong second quarter performance led by solid sales gains in its US cleaning and sanitizing businesses, Asia Pacific and Latin America operations and a strong performance from acquisitions.

Ecolab’s reported sales rose 12% to $1.7 billion in the second quarter of 2011; when measured in fixed currencies, sales rose 8%. Adjusted for currency and acquisitions, sales rose 5%. Reported net income attributable to shareholders declined 3% to $126 million.

Second quarter 2011 sales for Ecolab’s US Cleaning & Sanitizing operations rose 9% to $752 million. Adjusted for acquisitions, sales increased 6%. Food & Beverage, Kay and Institutional led the growth. Ecolab’s U.S. Cleaning & Sanitizing operating income increased 3% to $143 million. Adjusted for acquisitions, US Cleaning & Sanitizing operating income decreased 4%, primarily reflecting the impact of higher delivered product costs, which Ecolab believes peaked in North America in the second quarter.

US “other services” sales increased 1% to $116 million in the second quarter. Operating income declined 15% to $16 million as higher service delivery costs more than offset sales gains and cost savings actions.

Sales from Ecolab’s international operations, when measured at fixed currency rates, grew 7% to $781 million in the second quarter. Adjusted for acquisitions and divestitures, fixed currency sales increased 5%. Fixed currency operating income increased 26% to $71 million in the second quarter as margins expanded in Ecolab’s international regions, led by EMEA. When measured at public currency rates, international sales increased 16% and operating income rose 40%.

Beauty RetailerSees Strong Q1
• Salon, cosmetics and fragrance retailer Ulta posted favorable financial results for the first quarter ended April 30, 2011. Net sales increased 20.6% to $386.0 million; while operating income increased 67.4% to $39.1 million. Net income soared 70.5% to $23.3 million.

“We had a terrific start to the year with total sales, comparable store sales and net income per share solidly ahead of our guidance, demonstrating the ongoing preference of our beauty experience and the continued success of our growth strategies,” stated Chuck Rubin, president and chief executive officer of Ulta. “Our first quarter results included net sales growth of 20.6% driven by an 11.1% increase in comparable store sales and the expansion of our store base. Operating income grew faster than sales climbing 67.4% from the first quarter last year to 10.1% of net sales. During the quarter, we gained market share advancing each of the priorities we set at the beginning of the year. To this end, we were pleased with our new store performance and remain on track to expand square footage by 16% this year.”

According to Rubin, the retailer “generated consumer excitement and heightened interest in Ulta with newness across categories, brands and services. In addition, we saw robust growth in guest count in our Ulta stores and at as we leveraged our active eight million-member loyalty base and delivered compelling social media, email and direct mail marketing campaigns. I am pleased with our positioning as we begin the second quarter and expect the continued implementation and strength of our strategies coupled with the focused execution of our team to result in a strong year of growth and significant accomplishments toward our long term goals.”

For the second quarter of fiscal 2011, the company said it expects net sales in the range of $378 million to $384 million, compared to actual net sales of $321.8 million in the second quarter of fiscal 2010.

For fiscal 2011, the company said it plans to open approximately 61 new stores and remodel 17 locations.