Acquisitions are driving sales growth at the Estée Lauder Cos.
The beauty company reported a 12 percent increase in net earnings to $298 million as net sales jumped 8 percent to $2.86 billion in its fiscal third quarter. Half of that sales growth was driven by incremental sales from recent Lauder acquisitions Becca Cosmetics and Too Faced, the company said. Diluted net earnings per common share were up 13 percent to 80 cents.
“Sales accelerated across every geographic region and in our three largest product categories, reflecting the range and strength of our brand portfolio and product offerings,” said Lauder chief executive officer Fabrizio Freda. “Our business in global travel retail and in China was exceptionally strong, driven by strong sales gains in virtually every brand. Our mid-sized and luxury brands, as well as online and specialty-multi retail channels, also led growth. Additionally, our recent acquisitions of Too Faced and Becca performed above expectations.”
Freda noted that Lauder’s strategy of penetrating specialty stores and selectively opening freestanding units in international markets is helping to put the company’s brands in front of new consumers.
“We will continue to seize opportunities in the most promising areas of prestige beauty and expect our sales growth to continue to accelerate in our fourth quarter, capping another strong fiscal year,” he continued. “In our fiscal fourth quarter, we plan to increase targeted investment spending behind the greatest opportunities to further our momentum into fiscal 2018.”
Lauder is projecting fiscal 2017 sales growth of between 6 percent and 7 percent at constant currency, with about 2 percentage pints coming from recent acquisitions. Constant currency earnings per share growth is expected to be between 8 percent and 9 percent, before charges.
By category, all segments except hair care posted net sales gains for the quarter. Skin care was up 3 percent to $1.1 billion; makeup 9 percent to almost $1.3 billion; and fragrance 22 percent to $336 million. Hair care was down 2 percent to $126 million.