U.S. cosmetics giant Estee Lauder Companies announced on November 2 revenues for the first quarter totalled USD 3.93 billion, a decline of 11 percent from USD 4.39 billion in the prior-year period, coinciding with a double-digit decrease in the firm’s Asia Pacific region.
The New York-based company said net sales in its APAC region plummeted 15 percent to USD 1.1 billion, due to the ongoing Covid-related restrictions impacting brick-and-mortar in greater China and Dr.Jart+ travel retail in South Korea. Korea’s double-digit growth from nearly all brands was more than offset by the decline from Dr.Jart+’s travel retail business, the company added.
In other APAC markets, Covid recovery drove strong net sales growth in most countries, led by Thailand, Malaysia and Japan. Net sales declined in skin care and makeup, reflecting the ongoing Covid-19 restrictions, and were only partly offset by net sales growth from fragrance and hair care in the region.
APAC operating income decreased, driven by the decline in net sales, partially offset by disciplined expense management, the company said.
“For the first quarter, we delivered organic sales in line with our outlook and adjusted EPS ahead of it even as the transitory external pressures of Covid-19 restrictions in China, high inflation globally, and a strong U.S. dollar intensified,” said Fabrizio Freda, president and chief executive officer.
“Fragrance and hair care each rose double digits organically, and makeup’s renaissance continued to realize its promise in markets reopening. Skin Care was the most challenged by Covid-19 restrictions in China, which significantly impacted the category in travel retail. All told, 13 brands grew organically, as M.A.C excelled in makeup, La Mer in luxury Skin Care, Jo Malone London in Fragrance, and Aveda in hair care. Encouragingly, we realized strong double-digit gains in many large developed and emerging markets around the world.”
As a result of the sales dip, Estee now expects 2023 net sales to decrease between 6 percent and 8 percent, compared with the prior forecast of a 3 percent to 5 percent growth.
The M.A.C brand owner expects full-year 2023 adjusted profit per share to decrease between 19 percent and 21 percent, compared with the previous forecast of a 5 percent to 7 percent growth.