Estee Lauder Cos. Reports Annual Sales Up 14%

The Estee Lauder Companies Inc., New York, reported net sales for its fiscal year ended June 30were up 14% to $5.79 billion from the prior year. Excluding the impact of foreign currency translation,net sales rose 9% for the year. For the year, net earnings increased 24% to $375.4 million.

“Fiscal 2004 was a year when we exceeded our expectations,” said William P. Lauder, president andchief executive officer. “We began the year with strong financial targets, revised them upward as theU.S. retail environment improved, and ended the year with outstanding results. Our worldwide brandrecognition and innovative products provided the basis for across the board sales growth in all productcategories and geographic regions. Our international business grew double-digits, while domesticallya rebound in consumer sentiment generated solid sales increases.”

Net sales for the fourth quarter ended June 30 grew 15% to $1.40 billion. Excluding the impact offoreign currency translation, net sales increased 12%. Net sales in the quarter increaseddouble-digits in skin care, makeup and fragrance, while hair care rose in high single-digits. Net salesincreased also in each geographic region, reflecting double-digit growth in Europe, the Middle East &Africa and Asia/Pacific and high-single-digit growth in the Americas.

Net earnings attributable to common stock from continuing operations were up 41% to $71.3 millionfor the fourth quarter. Also, operating income increased in skin care, makeup and hair care due tohigher sales. Fragrance operating income decreased reflecting the soft domestic fragrance market,coupled with increased support spending behind recent product launches and their international rollout,as well as development costs for future fragrance launches and new brands, according to executives.

Estee Lauder executives predict net sales for the first half of 2005 will grow 8-9%. Geographically,Europe, the Middle East & Africa are expected to lead net sales, followed by Asia/Pacific and theAmericas. On a product category basis, in constant currency, hair care and makeup are expected to lead growth, followed by skin care. Fragrance is expected to decline slightly. For 2005 full-yearresults, executives anticipate sales to rise 7-8%.

“We’ll look to carry this momentum into the new fiscal year setting our sights on continued growthand our long-term objectives,” Mr. Lauder predicted. “We expect to benefit from further building ourbrands, expanding our markets globally and diversifying our channels of distribution.”