Estee Lauder Companies Report Second Quarter Sales Down

The Estee Lauder Companies Inc. reported net sales for the second quarter ended Dec. 31, 2001 was $1.26 billion, down 3% from $1.29 billion in the prior-year period. This includes the negative impact of foreign currency translation. Net earnings were $90.1 million, a decrease from last year’s $127.3 million.

These results were in line with the guidance the company issued in December which blamed the general weakness in the U.S. retail environment, inventory contraction, particularly by U.S. retailers, and a sharp reduction in the company’s travel retail business resulting from substantially lower worldwide travel.

“This quarter our business was challenged by several external factors that resulted in lower net sales and earnings,” said Fred H. Langhammer, president and chief executive officer. “While I am disappointed with our overall results, sell-through exceeded shipments during the quarter in the U.S., demonstrating the underlying health of our brands; our lifestyle brands had worldwide sales increases and our company-owned retail stores performed well.”

“I expect our performance to improve through the remainder of the fiscal year and we are strongly supporting our brands and their position in the marketplace” he continued. “This is in line with our long-term strategy of creating value by building powerful brands.”

By category, skin care sales for the quarter rose 2% to $431.7 million. This was largely due to the launch of Total Turnaround Visible Skin Renewer from Clinique, LightSource Transforming moisture cream and lotion by Estee Lauder and A Perfect World White Tea Skin Guardian by Origins. Net makeup sales decreased 1% to $416.1 million on a reported basis.

As expected, fragrance sales were down 13% to $346.7 million. The decrease reflects the overall softness of the fragrance business in the 2001 holiday season and a decline in the company’s travel retail business. The current quarter benefited from the recent launch of the company’s newest men’s fragrance, T by Tommy Hilfiger, and continued success of Intuition by Estee Lauder.

Sales of hair care products for the quarter increased 36% to $58.4 million, as growth was seen at Aveda, Bumble and bumble and Clinique’s Simple hair care system.