The Estée Lauder Cos. Inc. has achieved a new high — $16 billion in annual sales, for the first time ever.
The company’s sales were propelled by the gradual reopening of stores during the COVID-19 pandemic, as well as the acquisitions of Dr. Jart+ and Deciem.
For the fiscal year ended June 30, Lauder posted $16.22 billion in net sales, up 13 percent from the prior-year period, and up 9 percent from 2019 figures. Net earnings were $2.87 billion, up from $680 million in the prior-year period.
“Our sales exceeded $16 billion for the first time ever, up 9 percent from fiscal-year 2019 on a reported basis, fueled by skin care and fragrance,” said Lauder president and chief executive officer Fabrizio Freda on the company’s earnings call Thursday morning.
The company posted $16.22 billion in net sales for the year, up 13 percent from the prior-year period. Net earnings were $2.87 billion, up from $680 million in the prior-year period.
You May Also Like
“We achieved net-zero carbon emissions and 100 percent electricity globally for our own operations,” Freda said, noting that the company has a “new level of ambition for climate action.”
In an interview, Lauder executive vice president and chief financial officer Tracey Travis said she sees a correlation between COVID-19 vaccinations and the company’s continued success.
“To the extent that people are comfortable going out in social settings, that certainly helps the makeup category. From a vaccination standpoint, that seems to have allowed for a lot of establishments to open back up and increase their capacity in restaurants and things like that and we see more people going out as a result of that, so yes, I do think there is a correlation,” Travis said.
Makeup sales may have declined in the year, but Travis said she’s seen a resurgence in foundations, and Freda said the company was seeing “early signs of a makeup Renaissance.”
The company has looked to see what Chinese consumers have been purchasing, Travis noted, and as people have started to go out — even if they are wearing masks — foundation sales have ticked upward.
“We might see a little bit of an impact on the lipstick category,” Travis said. “We’ll see a bit choppiness as it relates to the makeup category, but throughout the year particularly with vaccine increases…[we’ll see] a bit more stabilization.”
For the year, skin care sales jumped 28 percent, to $9.4 billion, versus $7.3 billion in 2020; makeup sales declined 12 percent, to $4.2 billion from nearly $4.8 billion; fragrance sales increased 23 percent to $1.9 billion, from $1.56 billion, and hair care sales rose 11 percent to $571 million, from $515 million.
For the fourth quarter of the fiscal year, Lauder posted $3.94 billion in net sales, a 62 percent spike over the prior-year period, when there were more pandemic-related store closures. Net income was $1.02 billion for the fourth quarter.
“Amid the challenges of the pandemic, we invested in near- and long-term growth opportunities and managed costs elsewhere with discipline, while making important progress on our social impact commitments and sustainability goals,” said Freda in a statement.
Freda credited skin care, luxury and artisanal fragrance, the Asia-Pacific region and online sales for the company’s growth. Lauder said its online sales have nearly doubled since fiscal 2019, as more consumers embrace shopping online during the pandemic. In North America, online sales made up about 40 percent of the business.
Eight of Lauder’s brands grew sales in the double digits, he said, including Estée Lauder, La Mer and Jo Malone London.
Skin care continues to be a bright spot in the business, and saw net sales growth across every region, the company reported. The acquisition of Deciem contributed 4 percentage points to growth in the category, and Dr. Jart+ grew in the double digits. At Dr. Jart+, hero franchises Cicapair, Ceramidin and Dermask have been particularly in demand.
The Estée Lauder brand also saw growth across regions, and was especially strong in mainland China, where it delivered double-digit growth in travel retail and online. The line’s hero franchises, including Advance Night Repair, Nutritious, Micro Essence, Revitalizing Supreme+ and Re-Nutriv, continue to drive sales.
La Mer and Clinique also did well in skin care.
Fragrance — in line with the broader prestige fragrance market — saw strong sales from Jo Malone London, Tom Ford Beauty, Le Labo, Kilian Paris, some designer fragrances and Editions de Parfums Frédéric Malle. Fragrance sales were boosted by additional sales in the bath, body and home categories.
Travis credited the phenomenon to consumers’ increased “focus on self-care, self-pampering” that happened during the pandemic.
Juice-wise, Tom Ford saw strong sales of classics Oud Wood and Black Orchid, as well as launches Tubereuse Nue and Costa Azzurra. Kilian saw strong sales of Good Girl Gone bad and new launch The Liquors franchise.
In hair, Aveda continued to do well, with the Botanical Repair and Nutraplenish and Invati lines boosting sales. Travis said Lauder now sees global potential in the prestige hair category.
“One of the things we’ve seen is during the pandemic people that had gone to salons actually started to buy and access prestige products at home more than they had been previously, and we’re seeing that continue even as salons have reopened,” Travis said.
Bumble and bumble, which has struggled in recent years, has been “reengineered” over the past year and a half to “position it for growth,” Travis said.
Sales were the strongest in the Asia-Pacific region, which saw a 29 percent year-over-year uptick to $5.4 billion in sales. Europe, the Middle East and Africa saw a sales increase of 11 percent, to $6.9 billion. Sales in the Americas were flat, at nearly $3.8 billion.
China, one of Lauder’s largest markets, saw a double-digit sales jump, and has seen consumers shopping across beauty categories, Travis said, led by skin care.
In North America, Travis said the company’s partnerships with Ulta and Target and Sephora and Kohl’s should help it to reach more consumers, as will continuing targeted digital ad spend.
Broadly, Lauder has been looking to diversify its distribution and make sure to sell its products where consumers want to buy them, Travis said.
That includes third-party platforms including Tmall, and expanding brands like MAC Cosmetics with Ulta Beauty. Travis said Lauder continues to work with U.S. department store partners to make sure “doors work for ourselves and for our retail partner,” and is working on department store plans for holiday.
“They’ve closed a number of doors, and in some cases, we’ve pulled out of doors that were underperforming,” Travis said.
Looking forward, Lauder predicts a continued recovery in the makeup and hair categories globally as countries reduce COVID-19 restrictions. Lauder also foresees growth in developed markets and in brick-and-mortar retail, and the gradual reopening of travel retail in the coming year.
For the next quarter, Lauder is projecting a sales uptick of between 17 and 19 percent.