THE BEAUTY REPORT: ESTÉE LAUDER COMPANIES Lauder performs consistently in TR
The travel retail business has always been a very important international channel for the Estée Lauder Companies (ELC) which registered a strong performance last year, while the company as a whole forecasts that net sales will grow between 6% and 7% for this 2017 full fiscal year. Doug Newhouse reports.
T DF&TR operator
he Estée Lauder Companies has long been a huge contributor to most leading turnovers
with its senior management recognition of the channel as both a solid profit centre and a brand-building platform. This year’s contribution to
overall sales from travel retail is once again expected to be very positive, even in the face of ongoing currency movements, changing consumer behaviour in some markets and increased terrorism in some locations. In particular, the beauty giant
expects its sales to accelerate in the fiscal third and fourth quarters this year due to increased consumer coverage and strong traction across its brand channels. As such, net sales are predicted
to increase by between 6% and 7% in constant currency terms, while foreign currency translation is expected to impact sales negatively by approximately 2% year-on-year. Having said this, senior
management admits that the forecast is optimistic considering the global beauty market is forecast to grow at between 4% to 5% during 2017. The company stated: “The
company’s annual growth has consistently outpaced global prestige beauty and, despite these global issues, is expected to continue to grow at least one percentage point ahead of the industry for the fiscal year, which is a strategic goal.” As part of this, the travel retail
business has continued to perform well in the sectors of skincare and makeup, with ‘solid performances’ from Estée Lauder’s Advanced Night Repair Intensive Recovery Ampoules, Revitalizing Supreme and Glamglow. The channel also benefited from double-digit travel retail sales in
JUNE 2017 This year’s contribution to overall sales from TR is once again expected to be very positive for ELC.
Europe, the Middle East and Africa thanks to key brands, which included Tom Ford, La Mer, MAC and Aveda, although the company also points to a very helpful increase in passenger traffic at the same time. In summary, the company’s
second quarter sale period (ending 31 December) saw net sales rise by 3% to $3.2bn year-on-year for the second quarter ending 31 December. Excluding the impact of foreign currency translation, net sales increased by 5%. At the same time, net earnings for the period dipped by 4% to reach $428m year-on-year.
Solid passenger growth These results also follow the excellent year reported earlier in fiscal 2016, with travel retail now predicted to play an even greater role in future, as the company explained: “Overall, international passenger traffic growth was solid across all regions in fiscal 2016, helping to drive growth in the travel retail channel. “Our strategic approach to the
channel emphasised diversification by region, category, brand and type of airport and we currently lead
in prestige skin care and makeup combined. We are positioned for even greater success in travel retail as we nimbly deploy resources to areas with greater traffic. “We are expanding our offerings
in luxury fragrance – a category that performs well in the channel, partly due to travellers purchasing fragrances as gifts – with brands like Tom Ford, Jo Malone London and Le Labo. “We see tremendous opportunity
in the channel over the long-term, particularly given that air travel is expected to double over the next 15 years.” This positive trend was also
[On ELC’s third quarter results] “Our business in global travel retail and in China was exceptionally strong, driven by strong sales gains in virtually every brand.”
Fabrizio Freda, President and CEO, Estée Lauder Companies
TRBUSINESS 47
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