Top Companies Report

3. Estée Lauder

July 1, 2015

New York, NY

Sales: $10.9 billion for the year ended June 30, 2014.

Key Personnel: William P. Lauder, executive chairman; Fabrizio Freda, president and chief executive officer; John Demsey, group president; Carl Haney, executive vice president, global research and development, corporate product innovation, package development; Leonard A. Lauder, chairman emeritus; Ronald S. Lauder, chairman, Clinique Laboratories, LLC; Sara Moss, executive vice president and general counsel; Michael O’Hare, executive vice president, global human resources; Gregory F. Polcer, executive vice president, global supply chain; Cedric Prouvé, group president, international; Tracey T. Travis, executive vice president and chief financial officer; Alexandra C. Trower, executive vice president, global communications. 

Major Products: Cosmetics, toiletries and fragrances. Prestige and Makeup Artists—Estée Lauder, Bobbi Brown, La Mer, Tom Ford, MAC, Prescriptives, Jo Malone, Smashbox, Clinique, Origins, Glamglow, Ojon; Fragrances—Aramis, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, Coach, Ermeneglido Zeda; Skin Care—GoodSkin, Grassroots, Lab Series; Salon and Pharmacy—Aveda, Bumble and Bumble, Darphin. 

New Products: Skin Care—Estée Lauder Advanced Night Repair Synchronized Recovery Complex II and Micro Essence Skin Activating Treatment Lotion; Clinique Dramatically Different Moisturizing Lotion + and Reformulated Repairwear Laser Focus, Smart Custom-Repair Serum, Sonic System Purifying Cleansing Brush; Makeup—Clinique All About Shadow, Estée Lauder Pure Color Envy sculpting lipstick; Fragrance—Estée Lauder Modern Muse, the Michael Kors Collection, Jo Malone Peony & Blush Suede, Tory Burch, DKNY MYNY and Estée Lauder Modern Muse Chic, Jo Malone Wood Sage & Sea Salt, Tom Ford Velvet Orchid; Hair Care—Aveda Reformulated Dry Remedy and Smooth Infusion Naturally Straight

Comments: The consumer is changing. How and where she buys her handbags, clothing and cosmetics are undergoing an upheaval, and no one understands the luxury consumer better than Estée Lauder. In fact, more than a decade ago, then-chairman Leonard A. Lauder warned retailers to get their act together, improve their stores, improve their mix and improve their attitudes toward consumers. Rather than take his advice, department store execs stuck their heads in the sand and now they’re being run over by online sales and subscription services.

In the past few years, Estée Lauder has expanded its multi-pronged digital presence encompassing e-commerce, m-commerce and prestige salon channels. In fiscal 2014, the company rolled out the final portion of its global Strategic Modernization Initiative that updated all systems to create more common and efficient ways of working together.

And it’s working. In 2014, Estée Lauder maintained its No. 1 position in the global prestige segment with a 14.8% share. Company execs note that Estée Lauder has grown three percentage points faster than the global prestige beauty segment overall and is nearly two times larger than the No. 3 competitor overall and is two times larger than the No. 2 competitor in global prestige makeup. Furthermore, Estée Lauder is the No. 1 player in several key markets around the world, including the US, UK, China, Brazil, Middle East and Africa.

In fiscal 2014, sales increased 8% to $10.9 billion and gains were recorded across all categories and geographies. Skin care sales increased 7% to $4.7 billion, products and brands that provided a lift included Advanced Night Repair Synchronized Recovery Complex II and Micro Essence Skin Activating Treatment Lotion from Estée Lauder and Clinique’s Dramatically Different Moisturizing Lotion + and reformulated Repairwear Laser Focus. Also providing a lift was the La Mer brand and Estée Lauder’s Nutritious line of products.

Makeup sales rose 9% to $4.2 billion on the strength of Lauder’s makeup artist brands, higher sales of Smashbox and the debut of All About Shadow from Clinique. On the downside, sales slipped for Chubby Stick Balm and High Impact Lip Color from Clinique.
Fragrance sales, too, gained 9% to $1.4 billion, thanks to the launch of Estée Lauder Modern Muse.