The Estée Lauder Cos. Inc. aims to leave its prestige beauty peers in the dust, and continue to grow faster than the overall market this year.
The beauty firm grew sales 10.3 percent in fiscal 2012, double the rate of the prestige market. Lauder plans to keep up the pace in the year ahead: The company’s sales are forecasted to increase between 6 and 8 percent, ahead of projected market growth of 3 to 4 percent, according to the company.
“We have been growing double [the pace] of the industry and faster than our competition,” Lauder’s president and chief executive officer Fabrizio Freda told WWD. “We are focused on being the fastest-growing company.” To do that — along with offsetting the impact of any uncertainty in international markets — Lauder is working to identify the most promising areas across categories, consumer segments and countries and retail channels, said Freda. On the channel front, Lauder, a longtime staunch supporter of department stores, is strengthening its ties with Sephora. For instance, this fall the company will test its flagship Estée Lauder brand, a venerable symbol of the prestige market, at 25 Sephora doors in North America. RELATED STORY: Jane Lauder, the Natural >>
A number of Lauder’s peers have had a tough go of it lately — ranging from leadership changes at Coty Inc. and Avon Products Inc., to intense scrutiny from Wall Street on top management at Procter & Gamble Co., and acquisition rumors circling Clarins.
Asked how Lauder has managed to avoid the fray, Freda said, “Success is a beautiful motivator to make an organization happy and focused. Success is acting as a group.”
The motivational tool seems to have worked.
Lauder reported on Tuesday that fourth-quarter net earnings attributable to the company gained 24.6 percent to $51.2 million, or 13 cents a diluted share, compared with $41.1 million, or 10 cents a share. Sales for the three months ended June 30 rose 9.3 percent to $2.25 billion, compared with $2.06 billion in the prior year.
For the year, net earnings attributable to the company gained 22.3 percent to $856.9 million, or $2.16 a diluted share, up from $700.8 million, or $1.74 a share. Sales increased 10.3 percent to $9.71 billion. The company once again increased its long-term operating margin target, raising it to 15.5 to 16 percent by fiscal 2015, up from 14.5 to 15 percent by fiscal 2014.
The news sent Lauder’s share price up 9.3 percent to close at $60.13 on the New York Stock Exchange Tuesday.
The company continued to pursue its strategy of focusing on fewer, more impactful new product launches. Lauder also continued to dial up advertising levels for the third year in a row. The company spent $2.5 billion on advertising in 2012, or 25.3 percent of sales.
“We will continue to increase advertising overall,” said Freda, adding the company will invest more across magazines, digital and TV in 2013. He said Lauder’s increased use of digital and TV advertising has allowed it to reach a broader base of consumers and therefore woo shoppers from the mass market to its brands, particularly Clinique, Estée Lauder and MAC Cosmetics. TV spots behind Clinique Even Better Clinical, according to Freda, have had “a huge impact in attracting people from mass to prestige.” And ads for Clinique Chubby Stick have helped to keep that trend going. During the company’s earnings call with Wall Street analysts, Freda said, “We continue to source business from mass.” To underscore his point, he noted that, for the second year in a row, the prestige sector is growing at a faster clip than mass-market beauty.
Freda said the company will continue to focus on skin care and Asia, but at the same time ramp up makeup innovation and prestige hair care. “We want to give power to every part of the portfolio and grow broadly in every part of the world,” he said. At the same time, Lauder is outpacing its cost-cutting plans. It ended the year by amassing a total of $708 million in cost savings since the strategy began in 2009. By the end of fiscal 2013, it plans to have generated $760 million to $785 million in savings, up from its original projection of $450 million to $550 million.
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)
Discovery is collaborating with British pop artist @philipcolbert on a new line of clothing and accessories called Discovery Shark. The collection, which will launch next summer for Shark Week’s 30th anniversary, features a whimsical line of women’s and men’s bomber jackets, sweatshirts, bags and more. #wwdfashion
“I’m always a big champion of a female rapper, and I’m glad to see a new voice that feels unique and authentic that’s coming up, and I think we’re going to see more great things from her,” said @itsjeremyscott about @iamcardib, who performed at @moschino’s Art Basel Miami Beach party last night. #wwdeye (📷: @lexieblacklock)
@janellemonae’s “What’s Your Frequency?” room in @refinery29's #29Rooms made its debut this week at the opening of the Los Angeles art exhibit. “It’s about the ongoing conversation around mass surveillance, the weaponization of technology and cultural uniformity. My space was created so that we can come together and talk about the complexities of our humanity,” said Monáe. #wwdeye (📷: @bucknerphoto)
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)