The Estée Lauder Companies reported a 2 percent decrease in sales to USD 15.61 billion for its fiscal year, hurt by mainland China weakness which the beauty giant forecast will continue into 2025.
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The New York-based company said organic net sales decreased 2 percent, hit by the ongoing softness in overall prestige beauty in mainland China and a decline in Asia travel retail, driven by a decrease in the first half, as the beauty company and its retailers reset inventory levels.
In Asia Pacific, sales decreased 3 percent, primarily driven by mainland China, partially offset by double-digit growth in Hong Kong and Japan.
Mainland China sales fell on ongoing softness in overall prestige beauty, including during holiday and key shopping moments, while Hong Kong sales rose by strong double digits, reflecting growth in skin care, fragrance and makeup, driven by the increase in travel compared to the prior year.
Japan sales increased by double digits, led by strong double-digit growth in fragrance, driven by domestic and traveling consumers, which fueled growth in nearly all channels of distribution, led by freestanding stores, said the owner of La Mer and Deciem brands, which clocked high single-digit and double-digit growth globally, respectively, during the year.
Globally, skincare sales fell 3 percent, again hindered by softness in mainland China, and declines in Asia travel retail. Makeup sales decreased 1 percent, while fragrance sales increased 2 percent, driven by mid-single-digit growth from the company’s luxury brands, namely Le Labo and Jo Malone, which increased double digits in Asia Pacific and The Americas, partially offset by a decline from Estée Lauder.
For the twelve months ending June 30, the U.S. beauty firm reported net earnings of USD 0.39 billion, compared with net earnings of USD 1.01 billion in the prior year.
“For fiscal 2025, we anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers,” said Fabrizio Freda, president and CEO.
“We intend to drive share gains in a market that continues to hold strong long-term promise. In the rest of our business, we are planning to deliver improved performance across both developed and emerging markets. To fuel this, our priorities are reigniting skin care, capitalising on the multiple growth drivers of high-end fragrance, moving faster in leveraging winning channels, launching accretive innovation inclusive of new, big opportunities, and enhancing our precision marketing capabilities.”
In a separate release, Estée Lauder said Freda is retiring from the helm of the company at the end of fiscal 2025. The longstanding executive will continue to lead and oversee the company until his successor is appointed, the company confirmed.