Strong First Quarter at Estée Lauder

The Estée Lauder Companies Inc. said for the first quarter ended September 30, 2017, net sales were a $3.27 billion, an increase of 14%, compared to the prior-year quarter. Incremental sales from the company’s recent acquisitions of Too Faced and Becca contributed approximately 4 percentage points of the reported sales growth. Net earnings rose 45% to $427 million.
 
“We delivered an outstanding financial performance in our fiscal 2018 first quarter, demonstrating the power of our diverse brand portfolio to leverage our multiple engines of growth,” said Fabrizio Freda, president and CEO. “ Building on the global momentum of the last fiscal year, we benefitted from a continued acceleration in China, Hong Kong, travel retail and global online, strength in several developed and emerging markets in Europe, and incremental sales from Too Faced and Becca.”
 
Freda said Lauder’s online and travel retail channels and most luxury and mid-sized brands posted double-digit sales gains.
 
“In addition, we saw encouraging signs of improvement in some U.S. prestige department stores, and our targeted expansion into more specialty-multi doors to reach new consumers continued to help us gain share. Sales growth in the Estée Lauder brand continued to accelerate, generating double-digit gains in the quarter. Our earnings per share reflected the strong sales gains combined with our success in leveraging those sales through cost saving initiatives, efficiencies and continued financial discipline.”
 
Freda also said that with “this strong start to fiscal 2018 and our confidence in the potential for our business, we are raising our full-year constant currency sales growth forecast to between 8% and 9% and increasing our constant currency earnings per share growth estimate, before restructuring charges, to 12% to 14%.”
 
Skin care net sales rose sharply, with exceptional double-digit gains from Estée Lauder, La Mer, Glamglow and Origins. These increases were partially offset by lower skin care sales from Clinique and Aveda, according to ELC.
 
The Estée Lauder brand grew globally, particularly in China and travel retail, due largely to the launch of Advanced Night Repair Eye Concentrate Matrix and gains in other Advanced Night Repair products. La Mer was driven by the success of new products in its Genaissance franchise, the launch of Moisturizing Matte Lotion, gains from existing products, and targeted expanded consumer reach.
 
Outstanding double-digit sales growth from Glamglow reflected additional product assortments and targeted expanded consumer reach, said the firm, while sales growth in Origins was generated in Asia and travel retail due to the continued success of several product lines in the facial mask and moisturizer sub-categories.
 
Makeup reported strong sales growth primarily driven by incremental sales from the company’s fiscal 2017 second quarter acquisitions of Too Faced and BECCA, exceptionally strong double-digit increases from Tom Ford in every region, and double-digit gains from Estée Lauder. Higher makeup sales were also generated from M•A•C, said ELC.
 
Sales from Tom Ford more than doubled, driven primarily by its lip color franchises, including the Tom Ford Lips & Boys and Soleil Color Collections, as well as strength in the eyeshadow and foundation sub-categories. At Estée Lauder, higher sales were fueled by the Double Wear and Pure Color Lip product lines.
 
These increases in makeup were partially offset by lower makeup sales in the US, primarily from Clinique and Bobbi Brown, reflecting a soft retail environment due, in part, to slow foot traffic in some U.S. brick-and-mortar stores.
 
Fragrance net sales increased, primarily due to strong double-digit gains from luxury brands Jo Malone London, Tom Ford and Le Labo. Partially offsetting these increases were lower sales of certain designer and Estée Lauder fragrances.
 
ELC said hair care sales were unchanged, with moderate growth from Aveda and Bumble and bumble offset by lower hair care sales from Origins. The growth from Bumble and bumble reflected initial shipments in advance of the brand’s launch in Ulta Beauty, partially offset by softness in the salon channel. At Aveda, online sales grew, while sales in freestanding stores were lower.