Estée Lauder posts strong results as luxury consumer returns

By Simon Pitman

- Last updated on GMT

Related tags Estée lauder Revenue Skin Cosmetics

Estée Lauder has reported a significant jump in both sales and profits as revenues from its premium product ranges pick up faster than expected.

The company’s revenue during the quarter rose 18.4 per cent to $2.48bn (€1.79bn), while net income rose 45.8 per cent to $278.6m, figures that far exceeded analysts’ expectations and sent share prices soaring on the New York Stock Exchange.

As well as the luxury segment, the company revealed that the results were propelled by duty-free and travel shoppers, together with consumers in emerging markets.

Emerging markets and travel retail boost sales

The US-based company attributes approximately half of its revenues from overseas, and has a particularly strong presence in the international travel retail segment, particularly in airports.

Skin care sales were up 25 per cent during the quarter to $1.07bn, make-up increased by 17 per cent to $928.8m, fragrance up 7 per cent to $356.8m and hair care was up 10 per cent to $103.8m.

In the skin care category the company said that it gained market share in countries where its products are sold in leading stores. In particular it said that sales of the recently launched Idealist Even Skintone Illuminator and Idealist Cooling Eye Illuminator were particularly strong.

Make-up boosted by artists and heritage brands

In make-up sales were driven by make-up artist brands and certain heritage brands, while the company made specific references to the recent launches of new Pure Color eye and lip products and Doublewear Stay-In-Place Makeup SPF 10.

In fragrance, increased sales were generated by the launches of DKNY Golden Delicious, Estée Lauder Sensuous Nude and Coach Poppy Flower. Higher fragrance sales from the Tom Ford and Jo Malone luxury brands were counterbalanced by falling revenues from Estée Lauder pleasures bloom, ​pureDKNY and Coach Poppy.

Increased hair care sales were attributed to Aveda products, which included the recent launch of Be Curly Style-Prep, while Bumble and bumble also posted sales growth, which the company said reflected the launch of the Sleek & Straight line of products.

Sales increases were ‘broad-based’

“We are particularly encouraged that our exceptional results were broad-based as the company achieved double-digit gains in every geography region, including the United States, our home market,”​ said Fabrizio Freda, Estée Lauder CEO, speaking at an investor conference.

“We also reported double-digit growth in Skin Care, Makeup and Hair Care. And our science category showed solid growth. Overall, we outpaced our competition in prestige and mass and gained share in many of our important markets, such as China and Korea,” Freda added.

During the conference company executives also repeatedly underlined the benefits from the return of the luxury shopper. At the height of the recession in 2009, luxury sales plummeted worldwide, but the company says that this quarter has underlined how consumers in this category are now returning to their former spending patterns.

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