Sales: $9.7 billion. Net income: $857 million, for the year ended June 30, 2012.
Key Personnel: Fabrizio Freda, president and chief executive officer; William P. Lauder, executive chairman; John Demsey, group president; Carl Haney, executive vice president, research and development, product innovation and brand product development; Amy DiGeso, executive vice president, global human resources; Sara E. Moss, executive vice president and general counsel; Gregory F. Polcer, executive president, global supply chain; Cedric Prouvé, group president, international; Tracey T. Travis, executive vice president and chief financial officer; Alexandra C. Trower, executive vice president, global communications.
Major Products: Cosmetics, toiletries and fragrances. Prestige and Makeup Artists—Estée Lauder, Bobbi Brown, La Mer, Tom Ford, MAC, Prescriptives, Jo Malone, Smashbox, Clinique, Origins, Ojon; Fragrances—Aramis, Lab Series, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, GoodSkin, Coach, Grassroots, Ermeneglido Zeda; Salon and Pharmacy—Aveda, Bumble and Bumble, Darphin.
New Products: Skin care—Turnaround Overnight Radiance moisturizer, Moisture Surge Intense and Repairwear Uplifting Firming Cream, Revitalizing Supreme Global Anti-Aging Cream; Makeup—Repairwear Laser Focus All-Smooth Makeup, Lid Smoothie Antioxidant 8-Hour Eye Color, Pure Color Cheek Rush blush, MAC RiRi Summer; Fragrance—Estée Lauder Sensuous Nude and DKNY Golden Delicious; Hair Care—Invati (Aveda) and Concen-Straight (Bumble).
Comments: Evelyn Lauder has passed, Leonard Lauder may have stepped aside, but the Estée Lauder success story continues no matter who is at the helm. Late last year, the company announced an “organizational evolution” that expanded its number of group presidents, from two to four. The move also called for further realignment of brands to leverage additional innovations and strategic synergies. Specifically, Thia Breen has been named to the new position of group president North America. She oversees both the US and Canadian businesses. Lynne Greene has been named to the new position of group president, continuing to oversee the Clinique, Origins and Ojon global brands, with the addition of the Aveda and Darphin brands. Green also joins ELC’s Investment and Development Committee (IDC) to help guide global M&A strategy.
Breen and Greene will continue to report to Fabrizio Freda.
The moves come at a time when Estée Lauder is firing on all cylinders. For the third quarter of fiscal 2013, sales rose 2% to more than $2.2 billion and earnings rose 37% to nearly $179 million. CEO Freda acknowledged that tough conditions in Southern Europe and Korea were a drag on results, but he is confident that Estée Lauder will post full year record results when it reports fiscal 2013 results later this month.
For the nine months, sales increased 4% to nearly $7.8 billion and net income increased 15% to almost $928 million. The company expected top-line growth of 6% in fiscal Q4, down a bit from its prior 6-7% guidance. In an interview in May, Freda blamed the diminished outlook on continued sluggishness in Korea and Southern Europe. In addition, he said that while US growth remains solid, it has slowed during the past year. The same was true of China.
Last month, Michael O’Hare was appointed executive vice president, global human resources. He assumes his new position on September 30, 2013. O’Hare will succeed Amy DiGeso, who will retire after nearly a decade of leading the global human resources function at Estée Lauder. Prior to this appointment, O’Hare was with Heineken NV.
The company posted record results in fiscal 2012, as sales rose 10% last year and net earnings jumped 22%. It marked the third year in a row that Estée Lauder’s results had outpaced the overall beauty industry. By distribution channel, North American department stores and international department stores each accounted for 27% of sales, followed by perfumeries (13%), travel retail (11%), retail stores (10%), other (8%) and salon/spas (4%).
By product category, skin care sales rose 14% to more than $4.2 billion, driven by the successful introductions of products like Turnaround Overnight Radiance Moisturizer, Moisture Surge Intense and Repairwear Uplifting Firming crème from Clinique. Also providing a lift were higher sales of Idealist Even Skintone Illuminator, Advanced Night Repair Synchronized Recovery Complex and “various products” from La Mer and Origins, according to the company.
Makeup sales increased 10% to nearly $3.7 billion due, primarily, to the success of the makeup artist brands; i.e., Bobbi Brown and MAC. New products such as Repairwear Laser Focus All-Smooth Makeup and Lid Smoothie Antioxidant 8-Hour Eye Colour from Clinique helped boost sales, as did the continued success of products like Even Better Makeup and Chubbystick Moisturizing Lip Colour.
Fragrance sales rose 3% to nearly $1.3 billion on the strength of two new products: Estée Lauder Sensuous Nude and DKNY Golden Delicious and higher sales from Jo Malone and Tom Ford fragrances. The gains were partially offset by lower sales of DKNY Be Delicious, Estée Lauder Sensuous, pure DKNY and Estée Lauder pleasures bloom.
Hair care sales rose 7% to about $462 million. Gains from Aveda and Bumble and Bumble were offset by lower sales of Ojon.
By region, sales in the Americas increased 8% to $4.1 billion, driven by gains in the US, as the company continues to work with retailers to strengthen its “high-touch” marketing concepts. Sales in Brazil, Chile and Canada also provided a lift.
Sales in Europe, Africa and the Middle East increased 11% to $3.6 billion, as every product category posted gains and travel retail continued to grow. Gains in the UK, Germany and Italy were offset by declines in Russia, Spain and the Balkans.
Asia/Pacific sales rose 14% to about $2 billion, as nearly every country and product category posted gains. Best performing countries were China (along with Hong Kong) and Thailand, while Japan, Korea and Australia, were challenging, according to Estée Lauder.
Next month, Estée Lauder will roll out a reformulated version of Clinique Dramatically Different moisturizer, which is the No. 1 selling skin care product in the prestige market. According to the company, a unit of Dramatically Different is sold somewhere in the world every 5.2 seconds.
• Lord & Taylor, Macy’s, Dillard’s, Bloomingdales, Bon Ton and Belk were the lucky few retailers to feature a special Estée Lauder X Lilly Pulitzer “gift with purchase” collaboration for Spring/Summer 2013.
The fashion designer, known best for punchy, Palm Beach-inspired florals and prints, picked eight prints for makeup bags particular to each retailer. The kits contained Estée Lauder skin care and makeup samples and ere available with purchases of $35-$45 or more, depending on the store. Each limited edition gift set had a tag that read “Lilly Pulitzer for Estée Lauder.” Some also featured matching makeup mirrors or travel bottles.
In other fashion design news, for the seventh consecutive season, Estée Lauder sponsored the beauty look (makeup & nails) at the Derek Lam Fall 2013 runway show at the Sean Kelly Gallery in New York City. Estée Lauder creative makeup director Tom Pecheux led a team of 13 makeup artists to create the look on 27 models—while famed manicurist Jin Soon Choi and her team polished nails.
For more on Lauder’s color cosmetics expertise, be sure to check out the August issue for our look at Fall trends in lip, nail and eye color products.