New York, NY
Sales: $7.9 billion
Sales: $7.9 billion. Net income: $473 million for the year ended June 30, 2008.
Key Personnel: Leonard Lauder, chairman emeritus; William Lauder, executive chairman; Fabrizio Freda, president and chief executive officer; Olivier Bottrie, president, travel retailing worldwide; Thia Breen, president, North America; Maureen Case, global brand president, specialty group, Bobbi Brown, La Mer and Jo Malone brands; Dominique Conseil, global brand president, Aveda, salon and pharmacy channels; John Demsey, group president, Estée Lauder, MAC, Tom Ford and Prescriptives, Bobbi Brown, La Mer and Jo Malone brands; Amy DiGeso, executive vice president, global human resources; Dennis Eniry, president ELC online; Ivan Fernandez, president, Europe, Middle East and Africa; Veronique Gabai-Pinsky, global brand president, Aramis Designer Fragrances, BeautyBank and IdeaBank; Harvey Gedeon, executive vice president, research and development and product innovation; Caroline Geerlings, senior vice president/general manager, Prescriptives; Lynne Greene, global brand president, Clinique, Origins and Ojon brands; Jane Hertzmark Hudis, global brand president, Estée Lauder brand; Deborah Krulewitch, senior vice president, corporate administration; Richard Kunes, executive vice president and chief financial officer; Peter Lichtenthal, president, Bumble and Bumble; Sara Moss, executive vice president and general counsel; Per Neuman, general manager, Estée Lauder UK; Gregory Polcer, executive vice president, global supply chain; Cedric Prouve, group president, international; Daniel Rachmanis, senior vice president, Latin America and business development; Alexandra Trower, executive vice president, global communications; Fabrice Weber, president, Asia Pacific region.
|Flowerific, the newest fragrance from Flirt!, an Estée Lauder brand.|
New Products: American Beauty—Ultimate Diamond Restorative Anti-Aging Cream and Beloved Moments Perfume; Aveda—Dry Remedy, Men’s Line Extensions, Firm Hold Gel and Aroma, Enbrightenment, Sun Hair Care and Smooth Infusion Glossing Straightener; Bobbi Brown—Skin Foundation SPF 15, Perfectly Defined Mascara, Metallic Eye Shadow, Metallic Lip Color; Bumble and Bumble—Curl Conscious and Bb. Gels; Clinique—Youth Surge SPF 15 Age Decelerating Moisturizer, Comfort On Call Allergy Tested Relief Cream, Redness Solutions Instant Relief Mineral Powder, Even Better Makeup SPF 15, High Impact Curling Mascara, High Impact Lip Colour SPF 15, Turnaround Instant Facial, Turnaround Radiance Peel Once-A-Week System, Clinique Turnaround Body Smoothing Cream; Coach—Legacy fragrance and Legacy lipsticks; Daisy Fuentes—Dianoche Love Fra- grance; DKNY—DKNYMen; Estée Lauder—Sensuous, Turbo- Lash All Effects Motion Mascara, Time Zone Line and Wrinkle Reducing Moisturizers, Advanced Night Repair Synchronized Recovery Complex, Private Collection Jasmine White Moss; Eyes by Design—Full Collection; Flirt—Flowerific perfume spray and Lash-a-delic fast defining mascara; Good Skin Labs—Sculptinex Instant Resculpting Face Treatment; Grassroots Research Labs—Blue Algae Enriched Firming Cream and Vitamin C Power Brightening Cream with SPF 25; Jo Malone—Sweet Lime & Cedar cologne, Sweet Lime & Cedar collection, Kohdo Wood Collection;Lab Series—Lab Series Active Body (hand cream and body wash); MAC— Hello Kitty, Viva Glam VI Special Edition, Emanuel Ungaro, Dame Edna, Cult of Cherry and Mineralize Permanent Display collections; Mineralize Blush, Mineralize SPF 15 Foundation/Loose, Studio Sculpt SPF 15 Foundation, Studio Sculpt Concealer, Prep + Prime Line Filler, Cremesheen Lipstick, Dazzlelash, Dazzleglass; Ojon—Tribal Indulgences Batana shower gel and body cream, Restorative Pre-Cleansing Treatment; Origins—A Perfect World Deep cleanser with White Tea, Dr. Andrew Weil for Origins Plantidote Mega-Mushroom Skin-Calming Face Mask and Night Health Collection, Youthtopia Age-correcting serum with Rhodiola, Make A Difference Skin rejuvenating treatment lotion and Ultra-Rich Rejuvenating Cream; Tom Ford—White Patchoulii. To be launched: Jo Malone—Vanilla & Anise (September).
Comments: A new era commenced this month at Estée Lauder. Fabrizio Freda is the president and chief executive officer, and will be responsible for developing the company’s overall vision, strategy, financial objectives and investment priorities. William P. Lauder is executive chairman and chairman of the board and Leonard Lauder is now chairman emeritus.
One of the key focuses during Mr. Freda’s leadership will be driving out costs—a lot of them. In fact, the goal is to reduce costs by $450-550 million, and one way to accomplish it is via attrition. Estée Lauder plans to reduce its workforce by 2000 employees (6%) during the next two years. In early June, Lauder began letting people go. The move is expected to boost operating margin from 7-8% to 12-13% in the short term and as much as 15% in the future.
At the same time, however, the company is focused on top-line growth. Mr. Freda expects Estée Lauder to grow 1% ahead of the market. To get there, the brands have been reorganized by channel and consumer segmentation and executive leadership has been reworked accordingly. The overall goal is to take Lauder’s best in North America to the rest of the world, while at the same time taking what works in Asia, Europe, etc. and bringing them to North America.
|The newest anti-aging serum from Estée Lauder.|
Still, the company will also make further investments in consumer knowledge and global research and development to drive innovation and creativity, which have been hallmarks of its 63-year history, according to a company spokesperson.
As executive chairman, Mr. Lauder will partner with Mr. Freda to create significant long-term shareholder value for the company’s investors. Together they will help drive and support the company’s brand and global expansion opportunities in addition to his day-to-day management responsibilities.
These moves come at a time when Estée Lauder, like every other corporation, is feeling the effects of the global recession. Third quarter sales declined 10% to $1.7 billion and net earnings plunged 70% to $27 million.
For the nine months ended March 31, 2009, the company reported a 4% decline in sales to $5.64 billion. Net earnings fell 33% to $236.3 million.
In contrast, in fiscal 2008, Estée Lauder reported a 12% increase in sales to $7.04 billion. Those gains were driven by skin care, which rose 15.2% to $2.99 billion. Makeup sales rose 10.6% to $3 billion; fragrance sales increased 9.4% to $1.4 billion and hair care sales were up 13.3% to $427 million.
By region, sales in the Americas rose 4.2% to $3.7 billion; sales in the Europe, the Middle East & Africa region rose 20.6% to $3 billion and sales in Asia/Pacific rose 21.3% to nearly $1.2 billion.
Skin care sales growth was greatest in the Asia/Pacific region, due to new whitening products and higher sales in Greater China. The company also credited the category’s growth to new product launches such as Cyber White EX by Estée Lauder and Redness Solutions from Clinique.
Double-digit gains in makeup sales were driven by makeup artist brands, which contributed more than 65% of incremental sales.
Fragrance sales growth was strongest in Europe. Products that contributed to the increase included Sean John Unforgivable Woman, Dreaming Tommy Hilfiger, DKNY Be Delicious and Estée Lauder Pure White Linen Light Breeze.
Hair care sales were up, thanks to the acquisition of Ojon and higher sales from Aveda and Bumble and Bumble.