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Estée Lauder Companies announces financial results

Estée Lauder

The Estée Lauder Companies Inc. reported net sales of US$16.22 billion for its fiscal year ended 30th June, 2021, an increase of 13 percent from US$14.29 billion in the prior-year period.

SEE ALSO : Estée Lauder appoints Executive Vice President

Excluding the impact of currency translation, net sales increased 11 percent. Net sales grew in every region and in most product categories, reflecting the gradual reopening and recovery in brick-and-mortar retail stores in certain markets compared to the prior year when retail locations closed in most markets during the second half of the year as COVID-19 spread globally. Incremental net sales from the Company’s acquisition of Have&Be Co. Ltd. and the increase in its ownership of Deciem Beauty Group contributed 2 percentage points of growth to reported net sales.

The Company reported net earnings of US$2.87 billion, compared with net earnings of US$0.68 billion last year. Diluted net earnings per common share was US$7.79, compared with US$1.86 reported in the prior-year period. Excluding restructuring and other charges and adjustments, adjusted diluted net earnings per common share increased 57 percent to US$6.45, and rose 54 percent in constant currency.

Total reported operating income was US$2.62 billion, an increase from US$606 million in the prior year. In constant currency, adjusted operating income increased 44 percent, primarily reflecting higher net sales.

Skin care net sales grew across every region, led by Estée Lauder, La Mer and Clinique. Incremental net sales of Dr. Jart+ and the increase in ownership of DECIEM contributed approximately 4 percentage points to skin care net sales growth. Dr. Jart+ contributed strong double-digit organic growth in the second half of the fiscal year driven by consumer demand for high loyalty hero franchises, including Cicapair, Ceramidin and Dermask.

Estée Lauder delivered double-digit growth, reflecting growth in all regions, with significant strength in mainland China. It delivered double-digit growth in travel retail and online, driven by consumer demand for high-loyalty hero franchises, including Advanced Night Repair, Nutritious, Micro Essence, Revitalizing Supreme+ and Re-Nutriv. Within these franchises, net sales growth benefited from successful new product launches of Advanced Night Repair Synchronized Multi-Recovery Complex and Revitalizing Supreme+ Bright.

Strong double-digit growth from La Mer was driven by significant strength among Chinese consumers in both mainland China and travel retail. Online also grew double digits globally. Net sales growth was driven by increases in hero products, including The Treatment Lotion, Crème de la Mer, The Concentrate and The Moisturizing Soft Cream. The launch of Genaissance de la Mer The Concentrated Night Balm and targeted expanded consumer reach also contributed to growth.

Clinique delivered double-digit growth in every region driven by strong demand for its hero products, including the Dramatically Different products and Even Better Clinical Radical Dark Spot Corrector + Interrupter. The launch of Moisture Surge 100H Auto-Replenishing Hydrator also contributed to growth.

Skin care operating income increased, primarily from higher net sales at Estée Lauder, La Mer and Clinique partially offset by an increase in certain incentive compensation. Incremental cost containment in response to COVID-19 was partially offset by strategic investments that were made during the fiscal year.

Makeup net sales declined among nearly all brands, led by M•A•C and Clinique. These declines were partially offset by growth at Too Faced and La Mer. The effects of COVID-19 disproportionately impacted makeup usage, particularly foundation and lip, in most markets. Makeup sales rose in the second half of the fiscal year in every region, reflecting the more advanced recovery in China and the easier comparisons to the second half of the prior year as COVID-19 spread globally.

Too Faced net sales growth reflected both targeted expanded consumer reach and strength in lip plumpers, including the successful launch of Lip Injection Maximum Plump Lip Plumper.

Net sales from La Mer grew due to the continued success of The Luminous Lifting Cushion Foundation in international markets.

Makeup operating income improved, primarily reflecting the year-over-year reduction of goodwill, other intangible and long-lived asset impairments.

Fragrance net sales grew, largely due to increases from Jo Malone London, Tom Ford Beauty, Le Labo, Kilian Paris, certain designer fragrances and Editions de Parfums Frédéric Malle. Fragrance growth accelerated during the year driven by continued resilience in luxury fragrance during the pandemic as well as easier comparisons in the second half of the fiscal year.

Jo Malone London’s net sales grew double digits primarily driven by strength in colognes, including the new Blossoms Collection. Bath & Body and Home also delivered strong growth reflecting consumer demand for home fragrance products during the pandemic.

Tom Ford Beauty grew strong double-digits, reflecting the successful launches of Bitter Peach and Rose Prick Private Blend fragrances as well as hero products, including Oud Wood and Black Orchid among others. The launches of Tubereuse Nue and Costa Azzurra also contributed to growth.

Net sales from Le Labo rose strong double digits with growth in all regions driven by hero fragrances and home products.

Kilian Paris’ net sales rose double digits driven by demand for hero products, including Good Girl Gone Bad, and the successful launch of The Liquors franchise.

Fragrance operating income increased, driven primarily by higher net sales and disciplined expense management partially offset by an increase in certain incentive compensation.

Hair care net sales rose, primarily reflecting successful innovation at Aveda, including Botanical Repair, and growth from existing product franchises, including Nutriplenish and Invati. Aveda’s online sales grew strong double digits, reflecting the brand’s expanded online services which drove sales to the channel while many salons and freestanding stores were closed.

Hair care operating results were flat reflecting higher net sales from Aveda, which was offset by the return of incentive compensation to pre-COVID-19 pandemic levels.

Geographically, North America net sales increased slightly in the region reflecting growth compared to the prior year where brick-and-mortar began to shut down in March 2020 due to COVID-19. Net sales in Latin America declined slightly, primarily reflecting lower net sales in Brazil due to the impacts of COVID-19.

Incremental net sales of Dr. Jart+ and the increase in ownership of DECIEM contributed approximately 1 percentage point to net sales growth.

Online sales grew double digits in The Americas, comprising 40 percent of sales, as the Company and many retailers captured consumer demand online utilizing new and existing digital capabilities, which more than offset declines from soft traffic in brick-and-mortar doors.

In North America, double-digit growth in the fragrance category and strong growth in skin care were mostly offset by the impacts of COVID-19 on the makeup category.

Operating income in The Americas increased, primarily reflecting the year-over-year reduction of goodwill, other intangible and long-lived asset impairments.

Europe, the Middle East & Africa net sales grew in the region, led by travel retail and online. During the fourth quarter, rising vaccination rates allowed some markets to reopen while others had additional closures, and brick-and-mortar retail locations started to slowly recover.

Incremental net sales of Dr. Jart+ and the increase in ownership of DECIEM contributed less than 1 percentage point to net sales growth.

Net sales from the Company’s global travel retail business increased year-over-year despite the curtailment of international passenger traffic in Europe, the Middle East & Africa and The Americas. This was more than offset by growth in Asia/Pacific driven by China domestic travel, especially in Hainan, and Korea.

Online sales rose strong double-digits, reflecting the Company’s increased focus on reaching consumers digitally, including the launches of new brand sites in India and several other countries as well as the launches on additional pure play retailers.

Operating income increased, primarily driven by the growth in travel retail.

Asia/Pacific net sales growth reflected increases in mainland China, Korea, Australia and several smaller markets.

Incremental net sales of Dr. Jart+ and the increase in ownership of DECIEM contributed approximately 6 percentage points to net sales growth.

Skin care, fragrance and hair care net sales grew strong double-digits in the region, while makeup net sales declined slightly.

The Company continued to focus its investments on digital marketing, which drove strong double-digit online sales growth. Sales of the Company’s products online represented 36 percent of sales for the fiscal year. Department stores, specialty multi and freestanding stores grew double digits as well.

In mainland China, net sales grew strong double digits led by continued strength in skin care, an acceleration in fragrance growth and the initial recovery in makeup during the year. Net sales growth benefited from successful programs during key shopping events, including the 11.11 Global Shopping Festival and the 6.18 Mid-Year Shopping Festival. Nearly every brand grew, led by luxury brands, and sales increased double digits in every channel.

Operating income increased, driven by higher net sales partially offset by strategic investments that were made during the fiscal year.

SEE ALSO : The Estée Lauder increases ownership of DECIEM Beauty Group

Fabrizio Freda, President and Chief Executive Officer said, “We begin fiscal 2022 as a stronger company thanks to our employees, whose compassion, creativity, and resolve have been extraordinary during the pandemic. Our success in the past year gives us confidence for the new year, as volatility and variability from COVID-19 are likely to persist for some time to come.”

“For fiscal 2022, we expect strong net sales and adjusted earnings per share growth with continued margin expansion. Our growth engines are poised to increasingly diversify as Makeup and Hair Care, developed markets in the west, and brick-and-mortar retail gradually recover and complement the strength of our existing growth engines. We anticipate that growth in emerging markets will also resume over time as the impacts of the pandemic abate,” continued Freda.