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Lauder Records Record Year

August 15, 2014

Emerging markets, makeup and luxury brands lead growth as sales rise 8%.

Mark another strong sales year for Estée Lauder Companies. For the fiscal year ended June 30, 2014, net sales were a record $10.97 billion, an 8% increase over the prior year, according to the global beauty giant.
 
“Fiscal 2014 was another outstanding year for our company. We achieved record results across many metrics, including sales, operating margin, earnings per share and operating cash flow,” noted Fabrizio Freda, president and CEO. “Our topline growth was nearly double that of prestige beauty and was broad-based across regions, product categories and channels, despite slower industry growth in some key countries. Our emerging markets, makeup and luxury brands, and our online, freestanding store and travel retail channels led our growth.”
 
According to Freda, Lauder also made “careful investment choices to support the fastest areas of growth, while continuing to eliminate non-value-added costs. This excellent performance further demonstrates the resilience and consistency of our strategic business model and strengthened our leadership in global prestige beauty.”
 
Skin care sales rose 7%, with positive performances coming from the Lauder’s new Advanced Night Repair Synchronized Recovery Complex II and Micro Essence Skin Activating Treatment Lotion and from higher sales from its Nutritious line of products. Recent product launches from Clinique, such as Dramatically Different Moisturizing Lotion+ and Even Better Essence Lotion, along with the reformulated Repairwear Laser Focus and initial shipments of Clinique Smart Custom-Repair Serum, contributed to sales growth, said the company. Higher sales from luxury skin care brand La Mer also contributed strong growth.
 
Makeup sales rose 9%, according to Lauder, fueled by double-digit growth from the company’s makeup artist brands and from recent launches, such as Pure Color Envy Sculpting Lipstick from Estée Lauder and All About Shadow from Clinique. Sales from makeup artist brands benefited from new product offerings, as well as expanded distribution in line with the company’s retail store strategy. Double-digit sales increases from Smashbox and the Tom Ford line of cosmetics contributed to the category’s growth.
 
In fragrance, strong double-digit sales growth came from luxury brands Tom Ford and Jo Malone. Sales gains were also generated from the recent launches of Estée Lauder Modern Muse, the Michael Kors Collection and Tory Burch. Overall, fragrance sales rose 9%, however, fragrance operating income declined, primarily reflecting higher investment spending behind recent major launches, partially offset by higher results from the company’s luxury brands.
 
Hair care net sales growth, which came in at 6%, was primarily driven by Aveda, reflecting solid gains in the salon channel and the continued success of its Invati line of products and the Dry Remedy and Damage Remedy franchises. Sales increased at Bumble and bumble, primarily due to higher sales to specialty-multi brand retailers. Ojon sales decreased, primarily reflecting its exit from the direct response television channel. The category’s growth also benefited from expanded global distribution, in particular to salons and travel retail for Aveda and to specialty-multi brand retailers for Bumble and bumble.
 
Hair care operating income increased, primarily reflecting higher net sales driven by expanded global distribution and new product launches, as well as strategically lower investment spending.
 
By region, net sales for the year in The Americas rose 6% while sales in Europe, the Middle East & Africa rose 11%. In the Asia/Pacific region, sales rose 5%.
 
According to Lauder, sales of the company’s online business grew double digits.
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