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5. Estée Lauder



Published July 11, 2011
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5. Estée Lauder

New York, NY

212.572.4200

www.esteelauder.com

Sales: $7.7 billion


Sales:

$7.7 billion. Net income: $478 million for the year ended June 30, 2010.


Key Personnel:

Fabrizio Freda, president and chief executive officer; Amy DiGeso, executive vice president, global human resources; John Demsey, group president; Harvey Gedeon, executive vice president, global research, development and product innovation; Richard W. Kunes, executive vice president and chief financial officer; Evelyn H. Lauder, senior corporate vice president; Leonard A. Lauder, chairman emeritus; William P. Lauder, executive chairman; Sara E. Moss, executive vice president and general counsel; Gregory F. Polcer, executive VP-global supply chain; Cedric Prouvé, group president, international; Alexandra C. Trower, executive vice president, global communications.


Major Products:

Skin care, makeup, fragrances and hair care products marketed under four divisions. High End Prestige and Makeup Artist Brands—Estée Lauder, MAC, Bobbi Brown, La Mer, Jo Malone, Tom Ford Beauty; Prestige Skin Care and Alternative Channels—Clinique, Origins, Ojon; Fragrance Licensing and Creative Incubator—Aramis, Lab Series, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, Good Skin, Sean John, Missoni Profumi, Daisy Fuentes, Coach, Grassroots Research Labs; Salon and Pharmacy—Aveda, Bumble and Bumble, Darphin.


New Products:

Skin Care—Advanced Night Repair Eye Synchronized Complex and Re-Nutriv Ultimate Lift Age-Correcting Collection, Repairwear Laser Focus Wrinkle & UV Damage Corrector and Even Better Clinical Dark Spot Corrector from Clinique, La Mer The Radiant Serum and The Eye Balm Intense; Makeup—Pure Color eye and lip products, Clinique Chubby Stick Lip Colour Balms; Fragrance—Coach Poppy, Hilfiger Loud for Her, Estée Lauder Pleasures Bloom; Hair Care—Aveda Control Force and Be Curly style prep.


Clinique’s new four-step program makes it easier than ever to get great looking skin.

Comments:

Estée Lauder is benefitting from a strong product lineup and pent up consumer demand for prestige products, including cosmetics. For the fiscal third quarter ended March 31, 2011, sales jumped 16% to $2.1 billion and net earnings more than doubled to nearly $125 million.


For the nine months, sales rose 13% to more than $6.7 billion and net earnings surged 44% to over $660 million.


“Our results for the quarter and year to date continue to validate our strategic direction,” said Fabrizio Freda, president and chief executive officer. “Our focus on building enduring brand equities and on serving the global demand for prestige quality products and high-touch services is clearly resonating with consumers.”


Through nine months, skin care sales rose 15% to $2.8 billion, makeup sales increased 14% to more than $2.5 billion, fragrance sales were up 10% to $1 billion, hair care sales rose 4% to $316 million and “other” fell 1% to less than $46 million.


With its fiscal year ending June 30, 2011, company executives were confident that a significant increase in global ad spending on new initiatives and product launches would increase sales between 10-11%. It’s no surprise that EL executives expect skin care and makeup to be the leading sales growth categories, followed by fragrance and hair care. Finally, geographic region net sales growth in constant currency was expected to be led by Europe, the Middle East & Africa, followed by the Americas and Asia/Pacific.


A Look Back

In fiscal 2010, sales rose 6% to nearly $7.8 billion and net income moreIn fiscal 2010, sales rose 6% to nearly $7.8 billion and net income more than doubled to $478 million. International operations accounted for 62% of sales. By distribution channel, international department stores accounted for 28% of sales, followed by US department stores (27%), perfumeries (13%), retail stores, travel retail and “other” (9% each), and salons/spas (5%). By product category, skin care accounted for about 41% of sales, followed by makeup (38%), fragrance (14%), hair care (5%) and other (<1%).


Skin care sales rose 12% to more than $3.2 billion, driven by growing demand for anti-aging products such as Lauder’s Advanced Night Repair Synchronized Recovery Complex, Advanced Night Repair Eye Synchronized Complex and Hydrationist Maximum Moisture Créme and Lotion.


Makeup sales improved 5% to nearly $3 billion, propelled by makeup artist brand sales outside the US. Sales were helped along by the launch of Clinique’s Even Better Makeup SPF15 and Superbalanced Powder Makeup SPF15, as well as Estée Lauder’s Resilience Lift Extreme Radiant Lifting Makeup SPF15 and Double Wear Foundation.


Fragrance sales fell 1% to about $1.1 billion, due to lower sales of designer fragrances such as DKNY Delicious Night, Hilfiger Men, Sean John Unforgivable Women, Sean John Unforgivable and DKNY Men.


Finally, hair care sales rose 3% in fiscal 2010 to nearly $414 million. Sales rose, in part, to the launch of Aveda’s Smooth Infusion Glossing Straightener and Control Force.


By region, sales in the Americas rose 1% to more than $3.4 billion. Sales in Europe, the Middle East & Africa increased 9% to more than $2.8 billion; and sales in Asia/Pacific rose 16% to more than $1.5 billion.


E-commerce sales rose 23% last year.


Estée Lauder went a ways in cutting costs last year, too, by aligning its regional operations in order to effectively work together. Within its largest region, the Americas, the company created the North American affiliate business unit to enable brand managers to share and leverage knowledge and insights, especially at the retail level.The unit helps reduce duplication, improve trade relations and establish a single point of contact with retail partners.



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