NEW YORK — The Estée Lauder Cos. Inc. is making the most of slowing growth in the global prestige beauty market.
The beauty giant bested first-quarter profit expectations, but trimmed back the high end of its annual sales projection as weakness in Europe and South Korea weigh on the overall market. The company said sales would grow by 6 percent to 7 percent in local currencies this year. In August, Lauder said sales would grow 6 percent to 8 percent.
Fabrizio Freda, president and chief executive officer, told WWD Thursday that the global prestige market would expand a “reasonable” 3 percent this year, down from growth of 4 percent to 5 percent over the last couple of years. Lauder continues to expect to grow at twice the rate of the overall market, with strength in the U.S. as well as China, where the firm is branching out into secondary and tertiary markets.
Southern Europe, which is digging out of a debt crisis, continues to be the major thorn in the side of prestige. Freda said the overall market is slowing in Italy, Spain, Switzerland, Greece, Portugal and France, and that Lauder is fighting back.
“In the south of Europe we are selectively investing in some of our winning brands and innovation in order to build market share,” Freda said. “We are growing in almost all of these markets…which means we are building market share.” The ceo predicted the Southern Europe prestige market would begin to grow again in 2014 and 2015.
In the U.S., Freda said the prestige market was welcoming in mass customers, who are trading up to take advantage of higher quality products and better service.
“If you go into a MAC store, you are 99.8 percent sure that you will get a great foundation shade,” the ceo said. “If you are shopping in the supermarket alone, it will be much more difficult to get the right shade.”
First-quarter profits attributable to Lauder increased 7.5 percent to $299.5 million, or 76 cents a diluted share, from $278.6 million, or 70 cents. Adjusted profits of 79 cents a share came in 2 cents ahead of the analysts’ consensus estimate of 77 cents.
Net sales for the quarter ended Sept. 30 rose 2.9 percent to $2.55 billion from $2.48 billion a year earlier.
Lauder now projects full-year earnings per share of $2.47 to $2.56, a slightly narrower range compared with the $2.44 to $2.56 previously forecast.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast