THE BEAUTY REPORT: ESTÉE LAUDER COMPANIES


“We delivered an excellent third quarter performance. Sales accelerated across every geographic region and in our three largest product categories, reflecting the range and strength of our brand portfolio and product offerings.”


Fabrizio Freda, Estée Lauder Companies


continued in the third quarter ended 31 March 2017, with net sales for the overall company up 8% to $2.86bn compared to $2.66bn and the comparative period a year earlier. This result also included significant contributions from the company’s acquisitions of Too Faced and Becca. Most importantly the company


reported that it is ‘on track’ to deliver strong full-year results, according to a very upbeat President and CEO Fabrizio Freda who also had some very positive words for the travel


retail contribution. He said: “We delivered an excellent third quarter performance. Sales accelerated across every geographic region and in our three largest product categories, reflecting the range and strength of our brand portfolio and product offerings. “Our business in global travel


retail and in China was exceptionally strong, driven by strong sales gains in virtually every brand. “Our mid-sized and luxury brands,


as well as online and specialty-multi retail channels, also led growth.


New makeup acquisitions “Additionally, our recent acquisitions of Too Faced and Becca performed above expectations. “These elements contributed to


stronger-than-expected constant currency sales growth that, combined with disciplined expense management, resulted in sharply higher earnings per share. “By further penetrating the


specialty-multi channel globally and selectively opening freestanding stores in some key international markets, our brands made great progress reaching new consumers. Our strategy and financial performance continue to be powered by our ability to deploy our diverse brand portfolio into fast-growing channels and consumer segments.” Looking at the most recent results


by segment, skin care net sales of La Mer rose in double digits, with ELC reporting success with both classic and new lines. The company also pointed to


Joined Jo Malone & MAC stores at Edinburgh Airport.


‘solid sales growth primarily in travel retail and China’, which it attributed mainly to sales gains with the Advanced Night Repair and Revitalizing Supreme lines. There was also strong ‘double-


digit’ sales progress from Glamglow. These results were tempered a


little by lower Clinique skin care sales, however the company pointed to sales more than compensating for this in other regions. There was also positive news


La Mer continues to perform well for ELC in TR. 48 TRBUSINESS


for makeup sales across the brand franchise, including some notable contributions from the travel retail business, although makeup sales across all distribution channels was


said to be flat. However, net sales of fragrances


increased thanks to strong double- digit gains from Jo Malone London, Tom Ford and Le Labo and a sales contribution from the recent acquisition of By Kilian. Last, but not least, the company’s Hair Care sales ‘decreased slightly’. One dampener on the business


was the unfavourable impact of the strong dollar on foreign earnings, but there was still plenty of positive progress in key markets, including Latin America and most markets in Europe, the Middle East and Africa. Countries reporting double-digit


increases included Russia, Israel, South Africa, the Balkans and India. Travel retail also contributed


strongly in double-digit style, with leading brand progress in this channel achieved by Tom Ford, Jo Malone, La Mer, MAC and Estée Lauder. The company also reported


strong double-digit growth in both Mainland China and Taiwan, while Malaysia also reported positive results. The upshot of all of this activity


saw ELC’s nine-month results to 31 March, 2017 rise by 4% to $8.93bn compared with $8.62bn in the previous comparative period, while net earnings came in at $1.02bn. Commenting on this result, the


company said: “Excluding the impact of foreign currency translation, net sales increased 5%. For the nine months ended 31


March, 2017, the negative impact of foreign currency translation on diluted net earnings per common share was $.10. “Adjusting for restructuring and


other charges, diluted net earnings per common share for the nine months ended March 31, 2017 were $2.97, and in constant currency rose 11% to $3.07.” ELC concluded by reporting


other charges for the nine months of $134m in connection with its previously announced Leading Beauty Forward initiative, while it also incurred expenses totalling $34m in development costs associated with its important initiative ‘to transform its global technology infrastructure’. «


JUNE 2017


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