Estee Lauder Posts a 4% Rise in Sales for the First Quarter

The Estee Lauder Companies Inc., New York, NY, today reported net sales for the first quarter ended Sept. 30 were $1.24 billion, a 4% increase from $1.19 billion in the prior-year period. Excluding the impact of foreign currency translation, net sales increased 2%. Net earnings were $73.4 million for the quarter compared with $97.1 million in the same period last year.

Fred H. Langhammer, president and chief executive officer, said, “I’m pleased with our first quarter results, which were in line with our guidance and reflected the calendarization and previously announced expenses associated with of our new product launch programs and marketing, advertising and other brand-building promotions.”

Net sales of skin care products for the quarter rose increased 6% to $421.7 million, reflecting the worldwide launches of Advanced Stop Signs by Clinique and Resilience Lift OverNight Face and Throat creme from Estee Lauder, as well as the domestic introduction of Make a Difference Skin Rejuvenating treatment from Origins.

Makeup sales for the quarter rose 4% to $468.0 million, fueled by double-digit growth from two of the company’s makeup artist brands, M.A.C and Bobbi Brown. During the quarter the company launched Dewy Smooth Anti-Aging makeup and Rich Texture blush by Clinique and So Ingenious Multi-Dimension liquid foundation and So Ingenious Multi-Dimension loose powder from Estee Lauder.

On a reported basis, fragrance sales increased 1% to $296.5 million, benefiting from the current quarter launch of T girl by Tommy Hilfiger, Estee Lauder pleasures intense and Donna Karan Black Cashmere, and strong sales of Lauder Intuition for Men. Fragrance results reflect the overall softness of the fragrance business, which is reflected in lower sales of Estee Lauder Pleasures and Beautiful as well as certain Tommy Hilfiger fragrances.

Sales of hair care products for the quarter rose 1% to $50.4 million, primarily due to growth at Aveda and Bumble and bumble with new products and additional retail store and salon distribution. Partially offsetting these increases were lower sales from Clinique’s Simple Hair Care System, which rolled out internationally in last year’s quarter, as well as the launch of the company’s Aveda affiliate business in Korea in the prior year first quarter.

In the Americas, net sales for the quarter increased 2% to $787.7 million due to new and certain existing products and growth from most developing brands, partially offset by the continued soft retail environment in the U.S. In Europe, the Middle East & Africa, net sales increased 5% over last year’s first quarter, excluding the impact of foreign currency translation. Most markets experienced sales growth, led by strong results in the UK, Spain, Italy and Switzerland.

The company’s travel retail business, reported in Europe, continues to recover as worldwide travel increases, with sales increasing slightly in the current quarter compared with the prior-year period. Mr. Langhammer said at a conference for journalists who had gathered to discuss German-American relations, “The travel business really took it on the chin.” As did the company’s sales in airports. Travel retail sales are down between 20-30% over the last year, he said. Approximately 14% of the company’s $4.5 billion total sales stems from travel sales.

On a local currency basis, Asia/Pacific net sales decreased 4% compared with last year’s quarter when the region grew 18%. Strong double-digit sales increases in Korea and Thailand, as well as higher sales in Japan were offset by lower sales in Australia, which had benefited from a change in retailer arrangements in last year’s quarter. Net sales in the region were $150.3 million, primarily reflecting the strength of the Japanese yen, Korean Won and Australian dollar during the quarter.

The company believes the general and economic uncertainty, particularly in the U.S., as well as the potential risk of negative global political events makes definitive forecasting difficult. However, based on current economic assumptions, the calendarization of the company’s programs, and business building activities, the company believes it will achieve sales and earnings growth in every remaining quarter throughout the fiscal year. Net sales for the second fiscal quarter are expected to grow between 5-7% on a constant currency basis versus last fiscal year’s second quarter.