Estée Lauder Companies’ Q3 Net Sales Rise 10%

The Estée Lauder Companies Inc. recorded net sales of $4.25 billion in its third quarter ended March 31, 2022, an increase of 10% from $3.86 billion in the prior-year period. Organic net sales increased 9%.

The maker of Clinique and Origins said net sales grew in every product category, largely reflecting continued recovery in brick-and-mortar retail stores, driven by double-digit growth in The Americas and Europe, the Middle East & Africa (EMEA) regions, as well as growth in global online. The company said it delivered strong sales growth in the context of increased COVID-related restrictions in China beginning mid-March 2022. These temporary restrictions reduced consumer traffic and travel as well as limited the company’s capacity to ship orders from its distribution facilities.

“We delivered strong sales growth and better-than-expected profitability in the third quarter of fiscal 2022 in the face of accelerated headwinds as the quarter evolved, including covid restrictions in the Asia/Pacific region. Every category grew organically, led by Fragrance’s outstanding performance globally and the makeup renaissance in western markets. Eleven brands contributed double-digit organic sales growth and further demonstrated our diversification, empowered by our multiple engines of growth strategy. Consumer demand remained robust even in this more inflationary environment,” said Fabrizio Freda, president and CEO.

Freda said given ELC’s “outstanding performance year-to-date, we expect to deliver a record year in fiscal 2022 despite temporary COVID-driven headwinds that reduced our fourth quarter outlook. We are confident that our business in China will rebound whencovid abates and accelerate our momentum.”
 
Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably the acquisition of the majority interest in DECIEM and closure of Becca); as well as the impacts from currency. Category and region commentary reflect organic performance, according to ELC.

COVID-19 Update

The covid-19 pandemic continued to disrupt the company’s operating environment globally, primarily impacting retail traffic, travel, supply chain, inventory levels and other logistics during the fiscal 2022 third quarter. The resurgence of covid-19 cases in many Chinese provinces led to restrictions late in the fiscal 2022 third quarter to prevent further spread of the virus. Consequently, retail traffic, travel, and distribution capabilities were temporarily curtailed. ELC’s distribution facilities in Shanghai operated with limited capacity to fulfill brick-and-mortar and online orders beginning in mid-March 2022.