The Estée Lauder Cos. Inc. annual meeting on Tuesday morning served as a victory lap for the company with president and chief executive officer Fabrizio Freda, touting a record-breaking year in which sales surpassed $10 billion for the first time.
“We have reason to celebrate,” Freda told shareholders, adding that the company’s operating margin reached a high of 15.2 percent in fiscal 2013.
During the banner year, new products accounted for 16 percent of the company’s sales — a higher percentage than in years past — driven, in part, by reformulations of key products including Clinique Dramatically Different Moisturizing Lotion+ and Estée Lauder Advanced Night Repair, said Freda.
The results prompted Lauder to elevate financial goals: It now aims to achieve an operating margin of 16.5 in fiscal 2016.
Another bright spot was e-commerce. “Our online business has more than doubled in the last four years,” said Freda, noting that it now accounts for 5 percent of the company’s total sales.
Freda spoke about Lauder’s plan for future growth, too. He said the company plans to continue to open freestanding stores in markets where there is little or no prestige beauty infrastructure, such as Brazil, India and Africa. In China, Lauder plans to expand to 14 cities classified as tier three or tier four with Clinique and Estée Lauder stores, said Freda.
Shareholders were in good spirits, too. Aside from the occasional financial question, most shareholders wanted to talk product. One woman gushed about the newly introduced Estée Lauder fragrance Modern Muse, “It’s amazing. I could bathe in it.” Another asked if Lauder might consider using older women in its advertising, to which Freda smoothly responded, “It’s not about aging. It’s about [being] ageless. We need to be able to reflect this new reality in our communication.” An “amen” was heard in the crowd.
During the meeting, five proposals were presented. Four were ratified, and one concerning a sustainable palm oil policy was not approved. Lauder stated in its proxy in advance of the meeting that it obtains its palm fruit oil from sustainable sources.