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.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye