Color Cosmetics Boost Sales at Estée Lauder

Buoyed by gains in color cosmetics, Estée Lauder said sales rose for the quarter and the year. For the three months ended June 30, 2016, net sales increased 5% to $2.65 billion. Fiscal 2016 fourth quarter sales benefited from innovative new products and double-digit growth in several emerging and developed markets, according to the company. Lauder also generated double-digit gains in its travel retail and online channels. However, Q4 net earnings fell nearly 40% to $93.5 million. The beauty company is going through a multiyear restructuring, dubbed Leading Beauty Forward, that entails cutting as many as 1,200 jobs to free up resources that it can invest in research and development as well as new technology.


Despite the moves, Estée Lauder may be hurt by the planned closure of 100 stores of Macy’s Inc., its biggest customer, which contributed about 10% of sales in the past few years, according to Stephanie Wissink, an analyst at Piper Jaffray Cos.


Still, Estée Lauder executives were upbeat following the announcement.


“We capitalized on shifting consumer preferences by leveraging our strength in makeup and positioning our company to win in luxury fragrances,” said President and CEO Fabrizio Freda. “We nimbly allocated resources and made strategic investments in areas that gave us terrific results, including emerging markets, our makeup category, and the online and specialty-multi retail channels. Importantly, we achieved these results against a backdrop of social and political instability, currency volatility and economic challenges.”


For the year, sales rose 4% to $11.26 billion, and net earnings increased 2% to $1.11 billion.


In fiscal 2017, Estée Lauder will aggressively pursue new opportunities to enhance its leadership position, according to Freda. That includes diversifying its distribution toward the fastest growing channels, while further developing mid-sized brands and the newest additions to its portfolio. The company is forecasting constant currency sales growth of 6-7%.