Prestige beauty continues to be one of the most desirable consumer sectors.
The Estée Lauder Companies Delivered Outstanding Fiscal Year 2019 Results
The Estée Lauder Companies reported outstanding financial results for its fiscal year ended June 30, 2019. Net sales of $14.86 billion increased 9% from $13.68 billion in the prior year. The Company posted net sales growth in its international business and nearly all product categories. Net sales increased 12%.
“Fiscal 2019 was an outstanding year for our Company,” said Fabrizio Freda, President and Chief Executive Officer The Estée Lauder Companies.
“We achieved strong net sales gains across our business, fueled by investments in our strategic priorities, including improved data analytics that helped power our innovation and digital marketing. Our winning strategy led to continued share gains in global prestige beauty.”
“With savings from our Leading Beauty Forward initiative and cost discipline throughout the organization, we grew profit far ahead of our net sales growth, while also investing in our strategic priorities.
“Many engines drove our growth. They included: nearly every market in the Asia/Pacific region and many other important emerging markets around the world; our skincare category in every region; the travel retail and online channels globally; and compelling innovations and high-quality products, which drove strong repeat purchases. Globally, three of our four largest brands grew strongly as did many of our small and mid-sized brands. Our results were particularly impressive given macro volatility and challenges in several key markets demonstrating our successful strategy of multiple engines of growth and our agility to reallocate resources to the best opportunities.”
Freda added, “We ended the year with a strong fourth quarter, driven largely by the same growth engines we had throughout the year. Additionally, we saw modest improvement in our U.S. business despite a tough retail environment.
“As the best diversified pure play in the industry, we are uniquely positioned to capture global share. In fiscal 2020, we plan to continue to invest in the most compelling opportunities, including those in emerging markets beyond China. We expect another year of strong net sales growth, margin improvement and a double-digit increase in earnings per share.”
Skin care net sales grew across most regions, led by Estée Lauder and La Mer. Clinique’s skin care net sales also grew globally in constant currency.
The Estée Lauder brand delivered double-digit net sales growth in all regions and nearly all channels of distribution. The increase reflected continued strength in certain of its core product franchises, including Advanced Night Repair, Perfectionist, Nutritious, Micro Essence and Revitalizing Supreme supported by successful innovations, such as Advanced Night Repair Eye Supercharged Complex.
Double-digit growth from La Mer was also broad-based, with net sales increasing across all regions and channels, driven by hero products, including Crème de la Mer, The Concentrate and The Treatment Lotion. Targeted expanded consumer reach also contributed to growth.
Net sales growth in makeup was primarily driven by higher net sales from Estée Lauder, M· A· C, Tom Ford Beauty and La Mer. Too Faced also contributed to the growth. These increases were partially offset by lower net sales from Clinique and
Estée Lauder generated strong net sales growth, driven largely by success from its Double Wear franchise and the Pure Color line of products.
M· A· C’s net sales increase was led by double-digit growth from Greater China, Japan and the Middle East, as well as travel retail.
Net sales from Tom Ford Beauty increased double-digits, primarily driven by its lip color and eye shadow products in Asia/Pacific and the travel retail channel, as well as targeted expanded consumer reach, including the brand’s highly successful launch on Tmall. Emerging market growth outpaced the total brand growth, driven by China, Israel, India and Singapore.
La Mer’s strong double-digit growth across international markets was largely driven by the recent launch of The Luminous Lifting Cushion Foundation as well as targeted expanded consumer reach.
Makeup operating income declined, reflecting lower results across several brands, due to planned investments to support new and existing products, as well as lower results from Smashbox driven by the decline in net sales and $90 million of goodwill and other intangible asset impairments. This decrease was partially offset by higher results from Estée Lauder, primarily due to higher net sales with greater expense leverage.
Net sales increased, reflecting growth from luxury fragrances, including Jo Malone London, Tom Ford Beauty, Le Labo and By Kilian. These increases were mostly offset by lower net sales from certain designer fragrances and Estée Lauder.
Jo Malone London’s net sales increase primarily reflected growth in colognes and expanded targeted consumer reach in Asia/Pacific, including the brand’s launch on Tmall.
Increased net sales from Tom Ford Beauty reflected strong growth from Private Blend fragrances Soleil Blanc and Oud Wood, as well as expanded targeted consumer reach.
Le Labo and By Kilian net sales increased, primarily due to expanded targeted consumer reach and new product launches. Fragrance operating income declined, primarily driven by investments in advertising and promotional activities and store operations to support targeted expanded consumer reach, as well as lower net sales from certain designer fragrances.
Hair care net sales increased, primarily reflecting higher sales from Aveda, particularly online, driven by the launch of Cherry Almond Softening Shampoo and Conditioner and the continued success of certain hero franchises, such as the Rosemary Mint and Shampure product lines. The increase was partially offset by lower net sales from Bumble and bumble, primarily in the North America salon and specialty-multi channels.