Estee Lauder Holds to Forecasts, Mulls Acquisitions

U.S. cosmetics giant Estee Lauder is maintaining its growth targets for the current year despite an economic slowdown in the United States and is on the look out for acquisitions, its chairman said on Friday. Fred Langhammer told French daily Les Echos that the world’s fifth largest cosmetics group had noted a slight weakening as store visits declined, but said that was not a cause for worry. The group, whose brands include cosmetics firms MAC and Clinique, achieves 60% of sales in the United States.

“Estee Lauder has had half a century of uninterrupted growth and that, whatever the economic climate,” Mr. Langhammer said. “The current economic slowdown does not put our forecasts in question.”

For the 2000/01 year that ends in June, Estee Lauder expects double-digit growth in most countries in Asia and Europe. For the group as a whole Langhammer is counting on 8.0-10%

consolidated turnover growth and net earnings per share of between $1.32 and $1.35, after $1.20 last year.

Though Estee Lauder, the world leader in luxury beauty products, has tested the mass market waters with its purchase of adolescent-targeted cosmetics firm Jane, Langhammer said that would remain a limited experiment.

“Estee Lauder does not want to enter a war on that front with the leading players,” he said.

France’s L’Oreal, the world’s biggest cosmetics group, is already well-established in that area. Meanwhile the cosmetics branch of luxury goods giant LVMH is planning to experiment in the mass market arena with a line of beauty products for sale in hypermarkets in France.

Instead Estee Lauder will focus on its robust make-up division and its small but rapidly growing haircare branch, and is open to acquisitions with strong potential for growth.

“Our ambition is to continue to grow at about 10% a year, without acquisitions. That does not prevent us from being on the look out for new brands, but we don’t want to make acquisitions simply to get bigger,” Mr. Langhammer said. “What interests us is the concept and the brand’s development potential.”