Business Booming at Estee Lauder

The Estée Lauder Companies Inc. reported strong financial results for its first quarter ended Sept. 30, 2015. Net sales rose 8% to $2.83 billion. Net earnings increased 36% to $309.3 million.
 
In leading categories, skin care net sales rose 2% to $1.1 billion, while makeup sales climbed 14% to $1.2 billion. Fragrance rose 9% to $412.9 million and hair care increased 5% to $134.3 million.
 
Skin care net sales increased due to the favorable comparison related to the accelerated orders. Contributing to the category’s sales were higher sales from La Mer and from Origins, as well as incremental sales from recent acquisitions.
 
Partially offsetting these increases were the unfavorable impact of foreign currency translation and lower sales from Estée Lauder reflecting softness in China and Hong Kong, due to difficult retail environments, as well as from Clinique, due to a difficult comparison with greater launch activity in the prior-year period. Sales declines from these two brands were partially offset by recent launches, such as New Dimension products from Estée Lauder and Clinique Smart moisturizers.
 
Higher makeup sales were primarily driven by excellent growth from the company’s makeup artist brands and strong double-digit growth from Smashbox and Tom Ford. These sales increases resulted from new product offerings, as well as expanded distribution in a number of channels, including freestanding retail stores, travel retail and specialty multi-brand retailers.

The Estée Lauder and Clinique brands also posted higher makeup sales. Increased net sales of Estée Lauder products were primarily due to new launches such as Pure Color Envy liquid lip potion and Double Wear Makeup to Go liquid compact.
 
While new product offerings from Clinique, such as Beyond Perfecting foundation and concealer contributed sales gains, the higher sales from Clinique were driven by the accelerated orders. Excluding this impact, Clinique makeup sales decreased due to unfavorable foreign currency translation.
 
The company’s makeup category is experiencing strong growth in product areas such as lipsticks and foundations, as well as increased prestige makeup usage in Asia. The increase in makeup operating income was primarily due to higher results from makeup brands and the Estée Lauder brand.
 
In fragrance, the sales increase primarily reflected strong double-digit gains from luxury brands Jo Malone London and Tom Ford, higher sales from the Aramis and Designer Fragrances division, and incremental sales from recent acquisitions. The sales growth is attributable to new product launches and expanded distribution. Partially offsetting these increases were lower sales of certain Estée Lauder and Clinique fragrances.
 
The hair care category’s growth benefited from expanded global distribution, primarily in salons, freestanding stores and travel retail for Aveda and from specialty-multi brand retailers for Bumble and bumble. Hair care also reflects net sales growth of the Smooth Infusion line of products by Aveda.