The Estée Lauder Cos. Inc. posted another quarter of strong sales growth.
For the fiscal third quarter, the beauty company posted an 11 percent gain in net sales, to $3.37 billion. Net earnings were up 49 percent to $555 million. Diluted net earnings per common share were up to $1.51 from 99 cents in the prior-year period.
“We delivered terrific performance in our fiscal third quarter, driven by strategic investments in our best opportunities combined with creativity and data-driven insights that fueled exciting innovations. These drivers strengthened loyalty to our brands and hero franchises and attracted new consumers globally. Our strongest growth engines were the Asia-Pacific region, the skin-care category, our Estée Lauder, La Mer and Tom Ford Beauty brands, and travel retail and global online channels,” said Lauder president and chief executive officer Fabrizio Freda.
Freda continued, “Our double-digit constant currency net sales growth was ahead of our long-term goal and we continued gaining share in global prestige beauty. With savings from our Leading Beauty Forward initiative, we reallocated resources into targeted advertising, while still growing profit faster than net sales gains.”
While the business had anticipated “a gradual moderation of growth in China and travel retail, that “didn’t happen,” he noted. “We continue to see strength in several of our key engines of growth and, as a result, we are again raising our net sales and EPS guidance for the year.”
Skin care was the fastest-growing category at Lauder, posting 21 percent growth in the quarter and bringing in $1.74 billion in sales. The Estée Lauder brand and La Mer helped boost sales, as did brand franchises like Advanced Night Repair, Nutritious, Perfectionist, Micro Essence and Revitalizing Supreme.
Makeup sales were up 5 percent in the quarter, to $1.46 billion. Tom Ford Beauty, Estée Lauder, La Mer and MAC posted sales gains, while Clinique and Smashbox posted declines.
In fragrance, sales were up 3 percent to $392 million. Estée Lauder and luxury fragrances, including Jo Malone London, Tom Ford Beauty, Le Labo and By Kilian posted gains, while designer fragrances did not.
Hair sales fell 2 percent, to $136 million in the quarter because of declines from Bumble and bumble, mostly in the North American salon channel.
Geographically, North America sales were down in the quarter by 2 percent, bringing in $1.15 billion, partially due to lower makeup sales in the U.S. Sales in Europe, the Middle East and Africa were up 15 percent, to $1.625, because of strong travel retail sales. Asia-Pacific sales continue to boom, up 25 percent in the quarter to $966 million.
Lauder is projecting net sales will increase between 7 percent and 8 percent, with diluted net earnings per common share between $0.72 and $4.79.