In Trends

Estée Lauder reports double-digit Q3 sales growth in global travel retail

Estee Lauder sales growth Asia Pacific Q3 global travel retail - Retail in Asia

The Estée Lauder Companies has recorded double-digit growth for its travel retail business in fiscal Q3.

The rise was led by strong growth from Tom Ford, Jo Malone, La Mer, MAC and Estée Lauder. An increase in global airline passenger traffic growth, new launch initiatives and targeted expanded consumer reach also contributed sharply to sales gains, said the company.

The company overall posted net sales of US$2.86 billion for its third quarter, up +8% compared to the prior-year quarter. Incremental sales from the company’s recent acquisitions of Too Faced and BECCA contributed approximately half the reported sales growth.

Net earnings increased +12% to US$298 million, compared with US$265 million last year.

Net sales and operating income in the company’s major product categories were ‘unfavourably’ impacted by the strength of the US Dollar in relation to most currencies. Total operating income in constant currency, before charges, increased +25%.

SEE ALSO: Estée Lauder appoints Patrick Bouchard to travel retail leadership role

The Estée Lauder Companies President and Chief Executive Officer Fabrizio Freda 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. 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.

SEE ALSO: Estee Lauder buys Too Faced in $1.45 billion deal

“We will continue to seize opportunities in the most promising areas of prestige beauty and expect our sales growth to continue to accelerate in our fourth quarter, capping another strong fiscal year. In our fiscal fourth quarter, we plan to increase targeted investment spending behind the greatest opportunities to further our momentum into fiscal 2018. We are confident in our ability to achieve our previously stated fiscal 2017 sales growth goal of 6% to 7% in constant currency, which includes approximately 2% of incremental sales from our recent acquisitions. We are also reiterating our constant currency earnings per share growth expectation of 8% to 9%, before charges, which reflects US$.07 of dilution related to acquisitions.”

Regional performance

Asia Pacific

• On a reported basis and in constant currency, sales increased, led by strong double-digit growth in China. The higher sales in China reflected strong double-digit gains in most brands and in the online, freestanding store and department store channels.
• Reported sales in Taiwan also grew double-digits, while in constant currency, Malaysia generated strong sales gains. The company’s business in Hong Kong continues to stabilise.
• Tom Ford, Jo Malone, La Mer and MAC each grew strong double-digits.
• These increases were partially offset by slightly lower sales in Indonesia and the Philippines.
• In Asia Pacific, operating income increased, primarily due to higher results in China and Singapore.

(Source: Moodie Davitt Report)

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