07.01.21
New York
www.elcompanies.com
Sales: $14.3 billion
Key Personnel
William P. Lauder, executive chairman; Fabrizio Freda, president and chief executive officer; John Demsey, executive group president; Carl Haney, executive vice president, research, product and innovation officer; Jane Hertzmark Hudis, executive group president; Jane Lauder, executive vice president, enterprise marketing and chief data officer; Leonard Lauder, chairman emeritus; Ronald S. Lauder, chairman, Clinique Laboratories, LLC; Sara Moss, vice chairman; Michael O’Hare, executive vice president, global human resources; Gregory F. Polcer, executive vice president, global supply chain; Cedric Prouvé, group president, international; Deirdre Stanley, executive vice president and general counsel; Tracey T. Travis, executive vice president of finance and chief financial officer; Meredith Webster, executive vice president, global communications
Major Products
Cosmetics, skin care, fragrances and hair care: Aerin Beauty, Aramis, Aveda, Becca, Bobbi Brown, Bumble and Bumble, Clinique, Darphin Paris, DKNY, DonnaKaran, Dr.Jart+, Editions de Parfums Frederic Malle, Ermenegildo Zegna, Estée Lauder, GlamGlow, Jo Malone London, Kilian Paris, La Mer, Lab Series, Le Labo, MAC, Michael Kors, Origins, Rodin Alio Lusso, Smashbox, Tom Ford Beauty, Tommy Hilfiger, Too Faced.
New products
Skin Care: Estee Lauder Advanced Night Repair Intense Reset Concentrate, Estée Lauder Advanced Night Repair Synchronized Multi-Recovery Complex and Perfectionist Rapid Brightening Treatment Serum, La Mer The Eye Concentrate, Clinique Even Better Clinical Dark Spot Corrector and Interrupter and Moisture Surge 100H, Smart Night Clinical MD Multi-Dimensional Repair Treatment, GlamGlow Brightmud, Dr. Jart+ Every Sun Day Protect & Correct, Protect & Hydrate, Cicapair, Firm & Smooth, Calm & Clear; Cosmetics: Becca Light Shifter Dewing Tint, Shimmering Skin Perfector, Light Shifter Finishing Veil, Bobbi Brown Real Nudes eyeshadow, Crushed Shine Jelly Stick, Clinique Even Better Clinical Serum Foundation, Darphin Intral Rescue Super Concentrate, Smashbox Be Legendary Prime & Plush lipstick and pencil, Always on Cream eyeshadow, Halo Healthy Glow Tinted Moisturizer; Fragrances: Jo Malone London Poppy & Barley, Frederic Malle Perfume Guns, Tom Ford Metallique ByKilian Angels’ Share, Roses on Ice; Hair Care: Aveda Nutriplenish, Bumble and Bumble Bb. Bond-Building. Acquisition: Deciem.
Comments: The US leader in prestige beauty was hit by the pandemic in fiscal 2020. Sales fell 3% on the year, but CEO Fabrizio Freda characterized the year as one without parallel, “a dramatic tale of two halves.”
In the first half, sales rose 14% driven by gains in prestige beauty in all parts of the world. But when the pandemic took hold, department stores closed, airports were shuttered and consumers turned shut-ins. As a result, Estée Lauder’s sales fell 20%. The company remained profitable by pivoting to online, where fiscal Q4 sales nearly doubled.
“As consumer adoption of online accelerates, so have our investments in high-touch services on our brand sites, such as live chat capability with video, enhanced virtual try-on, livestreaming and more,” explained Freda. “Our targeted investments help us reach more consumers who are spending increasingly more time on our sites, resulting in incredibly strong conversion rates. And this is just the beginning: We have many strategic initiatives underway to further unlock the potential of this important channel.”
Wherever and however consumers shop, they’re buying skin care products. In FY 2020, consumers cared only for skin care. ELC said skin care sales rose 13% last year. In contrast, makeup sales fell 18%, fragrance sales dropped 13% and hair care sales declined 12%. By category, skin care accounted for 52% of sales, followed by makeup (33%), fragrance (11%) and hair care (4%).
Led by Estée Lauder and La Mer brands, skin care sales grew across most regions. Skin care posted strong double-digit growth, due to gains in Asia/Pacific, with significant strength in mainland China, as well as growth in the Balkans and in the UK. It also delivered double-digit growth in travel retail and triple-digit growth online, driven by consumer demand for high loyalty hero franchises, including Advanced Night Repair, Perfectionist, Re-Nutriv, Micro Essence and Revitalizing Supreme+. Double-digit growth from La Mer was also driven by Asia/Pacific, with significant strength in mainland China, and by travel retail given strong growth in hero products, including The Treatment Lotion and relaunches of The Regenerating Serum and The Eye Concentrate.
With La Mer and By Kilian the lone exceptions, sales fell for every ELC brand. The company said the effects of COVID-19 had a larger impact on makeup, particularly foundation and lip, and makeup sales continued to be soft in most markets. Together, these impacts more than offset the 5% growth for the category in the first half of the fiscal year. However, La Mer sales grew despite the impacts of COVID-19 given strong growth in the first half of the fiscal year due to the success of The Luminous Lifting Cushion Foundation in international markets and successful holiday campaigns and events globally.
Fragrance sales fell due primarily to declines from certain designer fragrances, Estée Lauder and Jo Malone London, due to the impacts of COVID-19. Net sales also declined due to the expiration of the Tory Burch license agreement in December 2019. Additionally, the Estée Lauder brand had a difficult comparison due to the launch of Beautiful Belle in the prior-year period. Some good news? ELC reported strong double-digit net sales growth in Asia/Pacific accelerated year over year driven by the luxury and artisanal fragrance portfolio. Net sales from Le Labo rose mid-single digits with growth in nearly all regions and strong double-digit growth in Asia/Pacific and travel retail despite the decline in travel retail net sales in the second half of the fiscal year. Targeted expanded consumer reach also contributed to growth. Jo Malone London continued to grow net sales in Asia/Pacific, led by China, Korea and Japan, with the launches of Poppy & Barley, Vetiver & Golden Vanilla and Valentine’s Day gift sets, as well as targeted expanded consumer reach.
Hair care sales declined at both Aveda and Bumble and Bumble as COVID-19 led to retail and salon closures in the second half of the fiscal year. Prior to that, net sales were flat for the first half of the fiscal year. ELC said sales of Aveda’s Nutriplenish, a new line of hydrating hair care products, were strong globally prior to the salon and store closures related to COVID-19.
Sales were mixed by region. Sales in Asia/Pacific jumped 15% to more than $4.2 billion. Asia was the first to enter a pandemic lockdown and the first to escape it. Sales in Europe, the Middle East and Africa posted a 3% decline in sales to $6.2 billion, but sales in the Americas plunged 20% to about $3.8 billion.
Despite the decline in FY 2020 sales, ELC increased its R&D spending by nearly 13% to $228 million.
A new fiscal year brought better results. For the nine months ended March 31, 2021, sales rose 3% to nearly $12.3 billion. Skin care sales surged 23% to $7.1 billion However, makeup sales continued to slid, falling 24% to $3.2 billion. Fragrance sales rose 6% to $1.4 billion, but hair care sales were flat at $418 million.
In an interview during the Personal Care Product Council’s virtual meeting, Chairman William Lauder said he can see the light at the end of the tunnel, but can’t predict what retail will look like going forward.
“Online sales to consumers have been accelerating for a decade, but now things are moving even faster,” he noted. “How we communicate, interact and engage the consumer has fundamentally changed from a year ago. It is a new reality that we have to stimulate consumers and get them shopping again.
“A lot of people are spending real time at home. There are some fundamental changes in the way we work, play and interact with one another and we have to change.”
Different parts of the world are in different stages of recovery. For the nine months, Asia/Pacific sales jumped 26% to nearly $4.2 billion. Gains in China and Korea, and skin care led the surge. Lauder credited the popularity of Estée Lauder, La Mer and Dr. Jart+ in China and Dr. Jart+ and Jo Malone London in Korea for the gains.
Sales in Europe, the Middle East and Africa were flat at $5.2 billion. The company said results reflected the COVID-19 challenges in the UK, France and Iberia. Travel retail sales grew on the strength of Estée Lauder and La Mer sales.
Sales in the Americas fell 13% to $2.8 billion. Reported net sales in The Americas decreased in virtually all countries. US sales fell $387 million, in all product categories, led by makeup. The decline in North America prestige beauty, primarily makeup, and the ongoing competitive activity also contributed to the decline in net sales. However, direct-to-consumer online net sales in The Americas grew double digits for the nine months and represented approximately 22% of total net sales in the region.
Regardless of quarterly or even annual results, Estée Lauder Companies’ executives are looking forward. At a Deutsche Bank presentation last month, Freda noted that during the pandemic, Estée Lauder continued to invest for the future by improving its data analytics department, opening the Shanghai Innovation Center, expanding its Tokyo manufacturing capabilities and acquiring Deciem.
Freda said that prestige beauty fundamentals are intact. The global middle class as a percentage of the population grew from 27% in 2009 to 47% in 2019 and will reach 61% by 2030. Those gains have help per capita spending on prestige beauty rise 9% in the US, 39% in India, 52% in Brazil and 185% in China from 2015 to 2020.
www.elcompanies.com
Sales: $14.3 billion
Key Personnel
William P. Lauder, executive chairman; Fabrizio Freda, president and chief executive officer; John Demsey, executive group president; Carl Haney, executive vice president, research, product and innovation officer; Jane Hertzmark Hudis, executive group president; Jane Lauder, executive vice president, enterprise marketing and chief data officer; Leonard Lauder, chairman emeritus; Ronald S. Lauder, chairman, Clinique Laboratories, LLC; Sara Moss, vice chairman; Michael O’Hare, executive vice president, global human resources; Gregory F. Polcer, executive vice president, global supply chain; Cedric Prouvé, group president, international; Deirdre Stanley, executive vice president and general counsel; Tracey T. Travis, executive vice president of finance and chief financial officer; Meredith Webster, executive vice president, global communications
Major Products
Cosmetics, skin care, fragrances and hair care: Aerin Beauty, Aramis, Aveda, Becca, Bobbi Brown, Bumble and Bumble, Clinique, Darphin Paris, DKNY, DonnaKaran, Dr.Jart+, Editions de Parfums Frederic Malle, Ermenegildo Zegna, Estée Lauder, GlamGlow, Jo Malone London, Kilian Paris, La Mer, Lab Series, Le Labo, MAC, Michael Kors, Origins, Rodin Alio Lusso, Smashbox, Tom Ford Beauty, Tommy Hilfiger, Too Faced.
New products
Skin Care: Estee Lauder Advanced Night Repair Intense Reset Concentrate, Estée Lauder Advanced Night Repair Synchronized Multi-Recovery Complex and Perfectionist Rapid Brightening Treatment Serum, La Mer The Eye Concentrate, Clinique Even Better Clinical Dark Spot Corrector and Interrupter and Moisture Surge 100H, Smart Night Clinical MD Multi-Dimensional Repair Treatment, GlamGlow Brightmud, Dr. Jart+ Every Sun Day Protect & Correct, Protect & Hydrate, Cicapair, Firm & Smooth, Calm & Clear; Cosmetics: Becca Light Shifter Dewing Tint, Shimmering Skin Perfector, Light Shifter Finishing Veil, Bobbi Brown Real Nudes eyeshadow, Crushed Shine Jelly Stick, Clinique Even Better Clinical Serum Foundation, Darphin Intral Rescue Super Concentrate, Smashbox Be Legendary Prime & Plush lipstick and pencil, Always on Cream eyeshadow, Halo Healthy Glow Tinted Moisturizer; Fragrances: Jo Malone London Poppy & Barley, Frederic Malle Perfume Guns, Tom Ford Metallique ByKilian Angels’ Share, Roses on Ice; Hair Care: Aveda Nutriplenish, Bumble and Bumble Bb. Bond-Building. Acquisition: Deciem.
Comments: The US leader in prestige beauty was hit by the pandemic in fiscal 2020. Sales fell 3% on the year, but CEO Fabrizio Freda characterized the year as one without parallel, “a dramatic tale of two halves.”
In the first half, sales rose 14% driven by gains in prestige beauty in all parts of the world. But when the pandemic took hold, department stores closed, airports were shuttered and consumers turned shut-ins. As a result, Estée Lauder’s sales fell 20%. The company remained profitable by pivoting to online, where fiscal Q4 sales nearly doubled.
“As consumer adoption of online accelerates, so have our investments in high-touch services on our brand sites, such as live chat capability with video, enhanced virtual try-on, livestreaming and more,” explained Freda. “Our targeted investments help us reach more consumers who are spending increasingly more time on our sites, resulting in incredibly strong conversion rates. And this is just the beginning: We have many strategic initiatives underway to further unlock the potential of this important channel.”
Wherever and however consumers shop, they’re buying skin care products. In FY 2020, consumers cared only for skin care. ELC said skin care sales rose 13% last year. In contrast, makeup sales fell 18%, fragrance sales dropped 13% and hair care sales declined 12%. By category, skin care accounted for 52% of sales, followed by makeup (33%), fragrance (11%) and hair care (4%).
Led by Estée Lauder and La Mer brands, skin care sales grew across most regions. Skin care posted strong double-digit growth, due to gains in Asia/Pacific, with significant strength in mainland China, as well as growth in the Balkans and in the UK. It also delivered double-digit growth in travel retail and triple-digit growth online, driven by consumer demand for high loyalty hero franchises, including Advanced Night Repair, Perfectionist, Re-Nutriv, Micro Essence and Revitalizing Supreme+. Double-digit growth from La Mer was also driven by Asia/Pacific, with significant strength in mainland China, and by travel retail given strong growth in hero products, including The Treatment Lotion and relaunches of The Regenerating Serum and The Eye Concentrate.
With La Mer and By Kilian the lone exceptions, sales fell for every ELC brand. The company said the effects of COVID-19 had a larger impact on makeup, particularly foundation and lip, and makeup sales continued to be soft in most markets. Together, these impacts more than offset the 5% growth for the category in the first half of the fiscal year. However, La Mer sales grew despite the impacts of COVID-19 given strong growth in the first half of the fiscal year due to the success of The Luminous Lifting Cushion Foundation in international markets and successful holiday campaigns and events globally.
Fragrance sales fell due primarily to declines from certain designer fragrances, Estée Lauder and Jo Malone London, due to the impacts of COVID-19. Net sales also declined due to the expiration of the Tory Burch license agreement in December 2019. Additionally, the Estée Lauder brand had a difficult comparison due to the launch of Beautiful Belle in the prior-year period. Some good news? ELC reported strong double-digit net sales growth in Asia/Pacific accelerated year over year driven by the luxury and artisanal fragrance portfolio. Net sales from Le Labo rose mid-single digits with growth in nearly all regions and strong double-digit growth in Asia/Pacific and travel retail despite the decline in travel retail net sales in the second half of the fiscal year. Targeted expanded consumer reach also contributed to growth. Jo Malone London continued to grow net sales in Asia/Pacific, led by China, Korea and Japan, with the launches of Poppy & Barley, Vetiver & Golden Vanilla and Valentine’s Day gift sets, as well as targeted expanded consumer reach.
Hair care sales declined at both Aveda and Bumble and Bumble as COVID-19 led to retail and salon closures in the second half of the fiscal year. Prior to that, net sales were flat for the first half of the fiscal year. ELC said sales of Aveda’s Nutriplenish, a new line of hydrating hair care products, were strong globally prior to the salon and store closures related to COVID-19.
Sales were mixed by region. Sales in Asia/Pacific jumped 15% to more than $4.2 billion. Asia was the first to enter a pandemic lockdown and the first to escape it. Sales in Europe, the Middle East and Africa posted a 3% decline in sales to $6.2 billion, but sales in the Americas plunged 20% to about $3.8 billion.
Despite the decline in FY 2020 sales, ELC increased its R&D spending by nearly 13% to $228 million.
A new fiscal year brought better results. For the nine months ended March 31, 2021, sales rose 3% to nearly $12.3 billion. Skin care sales surged 23% to $7.1 billion However, makeup sales continued to slid, falling 24% to $3.2 billion. Fragrance sales rose 6% to $1.4 billion, but hair care sales were flat at $418 million.
In an interview during the Personal Care Product Council’s virtual meeting, Chairman William Lauder said he can see the light at the end of the tunnel, but can’t predict what retail will look like going forward.
“Online sales to consumers have been accelerating for a decade, but now things are moving even faster,” he noted. “How we communicate, interact and engage the consumer has fundamentally changed from a year ago. It is a new reality that we have to stimulate consumers and get them shopping again.
“A lot of people are spending real time at home. There are some fundamental changes in the way we work, play and interact with one another and we have to change.”
Different parts of the world are in different stages of recovery. For the nine months, Asia/Pacific sales jumped 26% to nearly $4.2 billion. Gains in China and Korea, and skin care led the surge. Lauder credited the popularity of Estée Lauder, La Mer and Dr. Jart+ in China and Dr. Jart+ and Jo Malone London in Korea for the gains.
Sales in Europe, the Middle East and Africa were flat at $5.2 billion. The company said results reflected the COVID-19 challenges in the UK, France and Iberia. Travel retail sales grew on the strength of Estée Lauder and La Mer sales.
Sales in the Americas fell 13% to $2.8 billion. Reported net sales in The Americas decreased in virtually all countries. US sales fell $387 million, in all product categories, led by makeup. The decline in North America prestige beauty, primarily makeup, and the ongoing competitive activity also contributed to the decline in net sales. However, direct-to-consumer online net sales in The Americas grew double digits for the nine months and represented approximately 22% of total net sales in the region.
Regardless of quarterly or even annual results, Estée Lauder Companies’ executives are looking forward. At a Deutsche Bank presentation last month, Freda noted that during the pandemic, Estée Lauder continued to invest for the future by improving its data analytics department, opening the Shanghai Innovation Center, expanding its Tokyo manufacturing capabilities and acquiring Deciem.
Freda said that prestige beauty fundamentals are intact. The global middle class as a percentage of the population grew from 27% in 2009 to 47% in 2019 and will reach 61% by 2030. Those gains have help per capita spending on prestige beauty rise 9% in the US, 39% in India, 52% in Brazil and 185% in China from 2015 to 2020.