Skin Care Sales Soar as Lauder Posts Strong Q3

The Estée Lauder Companies Inc. today reported strong financial results for its third quarter ended March 31, 2018. Net sales were $3.37 billion, an increase of 18%, compared with $2.86 billion in the prior-year quarter. Net earnings rose 25% to $372 million, compared with $298 million last year.
 
Excluding the impact of foreign currency translation, net sales increased 13%. For the quarter, the positive impact of foreign currency translation on diluted net earnings per common share was $.11. Adjusting for the restructuring and other charges and adjustments, diluted net earnings per common share for the three months ended March 31, 2018 increased 30% to $1.17, and in constant currency rose 17%, said ELC.
 
 “Our company delivered another excellent quarter in what we expect to be an outstanding fiscal year. Many areas of our business that contributed to our strong first-half results continued to thrive in our third quarter, as we generated 13% sales growth and 17% adjusted earnings per share growth, each in constant currency,” said Fabrizio Freda, president and CEO. “Among our multiple engines of growth, travel retail, online and Asia again were standouts, and we experienced strong momentum in other high growth channels and markets. Our performance this quarter reflected robust global demand across our portfolio, with virtually all our brands posting sales growth. Each of our three biggest brands grew globally, with exceptional growth in Estée Lauder. These results reflect our strong array of hero products, as well as product and service innovations that resonated well with today’s diverse global consumers.”

Freda added, “We continue to position our company for sustainable, profitable growth and long-term shareholder value creation, with strategic actions and targeted investments to build our brands and strengthen our assets. Our ability to anticipate prestige beauty trends enables us to quickly deploy our resources to capture potential growth opportunities. Amplifying our digital initiative to drive brand engagement, trial and loyalty is a priority.”

During the fiscal 2018 third quarter, the company recorded restructuring and other charges of $100 million ($75 million after tax) in connection with its previously announced Leading Beauty Forward initiative.
 
Skin care sales rose 31% in the quarter (25% in constant currency). Net sales growth benefited from increases in Asia, where skin care represents about two-thirds of the region’s product category mix. Growth also reflects strong innovations, gains from hero products, and the increasing demand from younger consumers, said ELC. There were “exceptional double-digit gains in most regions from La Mer, Estée Lauder, Origins and Glamglow, and Clinique achieved solid double-digit growth globally, according to ELC.
 
Higher sales at Origins were generated in large part from the continued success of several product lines in the facial mask and moisturizer sub-categories. Glamglow’s sales gains reflected strength from its core facial mask products and targeted expanded consumer reach, said ELC while Clinique’s sales gains reflected increases in the brand’s Moisture Surge product line.
 
Sales growth in makeup was primarily driven by strong double-digit increases from Estée Lauder and Tom Ford and solid gains from M•A•C and Clinique. Makeup sales for the quarter rose 9% (5% constant currency).
 
Sales from Estée Lauder were fueled by the Double Wear foundation and Pure Color product lines. At Tom Ford, higher sales were driven primarily by strength in the eyeshadow sub-category. The higher sales from M•A•C were due to strong growth in the Asia/Pacific region, particularly China and Hong Kong, and in travel retail, as well as success in the specialty-multi channel in the United States. Clinique’s sales growth stemmed primarily from emerging markets within Europe.
 
These increases were partially offset by lower makeup sales in the United States, reflecting slow foot traffic in some U.S. brick-and-mortar stores.

Fragrance saw a net sales increase, with results up 14% (7% constant currency), primarily due to strong double-digit gains from luxury brands.Jo Malone London delivered outstanding double-digit growth in every region and in travel retail.  Le Labo, By Kilian and Editions de Parfums Frédéric Malle each benefited from growth in existing products and targeted expanded consumer reach, said ELC. Partially offsetting these increases were lower sales of certain Estée Lauder fragrances.