Skin care continues to propel sales growth at the Estée Lauder Cos., which saw strong gains at La Mer, Clinique and other brands in the most recent quarter.
Skin care figures were up 31 percent for the quarter ended March 31, Lauder reported Monday, to $2.25 billion in net sales. The fragrance segment also fared well and posted a 30 percent uptick to $454 million. Hair increased 8 percent to $128 million.
Makeup sales, however, have continued to suffer. The segment posted an 11 percent decline, to slightly more than $1 billion in the quarter. Makeup sales had slowed before the coronavirus pandemic took hold but have further deteriorated as people minimize socializing and wear masks.
But Lauder president and chief executive officer Fabrizio Freda is predicting “a makeup Renaissance” — partially because of makeup activity in geographies that are further ahead in pandemic recovery.
“What we’re seeing in China, Israel and Australia — those are markets that are going ahead in terms of pandemic recovery and people are resuming some of their social occasions,” said Lauder executive vice president and chief financial officer Tracey Travis in a phone interview.
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She said the company has seen growth in mascara and other eye makeup, but is also tracking a comeback in foundation, which had seen a major sales setback during the pandemic.
Lauder plans to promote new launches, including Clinique’s Even Better Clinical Serum Foundation and a new mascara from MAC, as well as 2020 launches that were poorly timed for success, she noted. Last year, MAC launched a lip collection that Lauder will “reanimate” to drive sales, she said.
In skin care, the Estée Lauder brand grew in travel retail and mainland China. Advanced Night Repair Synchronized Multi-Recovery Complex was a bestseller, as were traditional hero products in the Revitalizing Supreme+, Daywear and Re-Nutriv lines.
La Mer’s growth was also strong in Asia, especially China. The brand’s expansion remains driven by hero products, including Crème de la Mer, The Concentrate and The Treatment Lotion.
Clinique’s hero products are selling well, too, as is the Mega-Mushroom line at Origins, the company said. Dr. Jart+ has gained momentum in mainland China and travel retail in South Korea.
In total, Lauder posted $3.86 billion in net sales for the quarter ended March 31, a 16 percent uptick from the prior-year period, when the company posted $3.35 billion. Net earnings were $456 million, compared to a net loss of $6 million for the 2020 quarter. Net earnings per share were $1.24, compared with a loss of 2 cents the prior year.
Online sales increased double digits globally, and travel retail sales also saw an uptick, Freda said. Estée Lauder, La Mer, Jo Malone London, Clinique and Tom Ford Beauty were the best-performing brands.
“If we had a reasonable offer, we would sell either one of those brands — so if there’s anyone out there that’s interested — but we did explore that, and it did not pan out,” Travis said.
Rodin will be moving under Jo Malone with a collaboration set to launch this fall, and Becca will wind down in September.
“Becca just never really got the kind of traction — they had a very strong, loyal but small customer base and really did not see the kind of growth we had expected. That happens sometimes when you have acquisitions. The makeup market is so competitive,” Travis said.
Globally, Lauder saw increases across regions, including The Americas, which grew 3 percent in the quarter, to $916 million in sales. “With the warmer weather, particularly in the Northeast, we actually see a pickup in our brick-and-mortar sales in North America,” Travis said. “North America was one of the regions that actually performed better than what we had expected.”
Lauder has shut down some underperforming stores and counters, as have department store chains Lauder sells with, and ultimately, that will lead to a more productive retail environment, Travis said. “When there is a resumption to whatever the new normal of brick-and-mortar traffic is, the productivity of those stores should be more productive and more profitable,” she said.
Europe, the Middle East and Africa gained 12 percent, to $1.7 billion in sales, and sales in the Asia Pacific region jumped 35 percent, to $1.3 billion.
On Monday, Lauder’s stock dipped more than 7 percent. Barclays analyst Lauren Lieberman said in a note that the company’s shares “continue to test new highs daily” and that “it would seem investor sentiment is similarly at an all-time high.”
“We have a hard time seeing how both this quarter’s revenue performance and…guidance could be ‘good enough,’” she wrote.
Lauder said it projects between 11 and 12 percent net sales growth for the fiscal year, versus the prior year.
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