Estée Lauder Reports Q3 Revenues

The Estée Lauder Companies Inc. today reported net sales of $2.86 billion for its third quarter ended March 31, 2017, an 8% increase compared with $2.66 billion in the prior-year quarter. Incremental sales from the company’s recent acquisitions of Too Faced and Becca contributed approximately half the reported sales growth.
 
Excluding the impact of foreign currency translation, net sales increased 9%. 
 
“We delivered an excellent third quarter performance. Sales accelerated across every geographic region and in our three largest product categories, reflecting the range and strength of our brand portfolio and product offerings,” said Fabrizio Freda, president and CEO.” “ Our business in global travel retail and in China was exceptionally strong, driven by strong sales gains in virtually every brand. Our mid-sized and luxury brands, as well as online and specialty-multi retail channels, also led growth. Additionally, our recent acquisitions of Too Faced and BECCA performed above expectations. These elements contributed to stronger-than-expected constant currency sales growth that, combined with disciplined expense management, resulted in sharply higher earnings per share.”
 
According to Freda, by “further penetrating the specialty-multi channel globally and selectively opening freestanding stores in some key international markets, our brands made great progress reaching new consumers. Our strategy and financial performance continue to be powered by our ability to deploy our diverse brand portfolio into fast-growing channels and consumer segments.
 
In addition, he said that ELC will continue to “seize opportunities in the most promising areas of prestige beauty and expect our sales growth to continue to accelerate in our fourth quarter, capping another strong fiscal year.”
 
In skin care net sales increased, with sharp double-digit gains from La Mer, driven by the success of new and existing products, as well as targeted expanded consumer reach.

The Estée Lauder brand delivered solid sales growth primarily in travel retail and China, due, in part, to gains in the Advanced Night Repair and Revitalizing Supreme lines of products. Strong double-digit sales growth from Glamglow reflected additional product assortments and targeted expanded consumer reach. These increases were partially offset by lower skin care sales from Clinique. The lower sales reflected sales gains in the Americas being more than offset by lower sales in the other regions. Operating income increased sharply, primarily from Estée Lauder and La Mer, reflecting higher sales. Estée Lauder also benefitted from a favorable comparison to higher spending behind launches in the prior-year period.
 
Makeup sales increased, primarily driven by incremental sales from the company’s fiscal 2017 second quarter acquisitions of Too Faced and BECCA, strong double-digit increases from Tom Ford in every region, double-digit gains from Smashbox and La Mer, and solid growth from Estée Lauder. The increased sales in Tom Ford were driven primarily by its lip color franchises, including new product offerings such as the Tom Ford Soleil Color Collection. Sales gains at Smashbox reflect the strength of the makeup category in specialty-multi. La Mer’s sales increase reflected the continued success of the Skin Color Collection. At Estée Lauder, higher sales were fueled by the Double Wear and Pure Color Envy product lines. The overall increase in makeup sales also resulted from M•A•C growth internationally, as well as our brands’ new product offerings, and selectively increasing their presence in high-growth channels like travel retail and specialty-multi, to reach new consumers. These increases were partially offset by lower makeup sales, primarily from Clinique and M•A•C in the United States, due to slow foot traffic in U.S. brick-and-mortar stores, particularly in certain U.S. tourist-driven stores, said Lauder. Makeup operating income was flat. Tom Ford, Estée Lauder and Bobbi Brown posted increased operating income, primarily due to higher sales. These increases were offset by declines from M•A•C and Clinique, primarily reflecting their lower sales in the U.S.
 
In fragrance, set sales increased, primarily due to strong double-digit gains from luxury brands Jo Malone London, Tom Ford and Le Labo, and incremental sales from the recent acquisition of By Kilian. Jo Malone delivered outstanding double-digit sales increases in every region, reflecting strong growth from existing fragrances and brand expansion and the recent launch of Cologne Intense Myrrh & Tonka. Increased sales from Tom Ford reflect, in part, the continued success and growth of existing fragrances, as well as new product launches. According to ELC, Le Labo benefitted from new and existing launches and targeted expanded consumer reach.
The recent launches of Tory Burch Love Relentlessly and Michael Kors Wonderlust also contributed to fragrance sales growth. Fragrance operating income increased sharply, primarily due to higher sales from our luxury brands noted above, as well as higher sales of certain designer fragrances.
 
Hair care sales decreased slightly, primarily due to a difficult comparison with several product launches in the prior year. Hair care operating income increased, reflecting effective expense management, said ELC.