The Estée Lauder Cos. recorded a 14 percent sales jump for its first fiscal quarter.
Wall Street was clearly pleased and pushed shares ahead 10 percent in early trading.
Net sales were $3.27 billion, up from $2.87 billion in the prior-year period. Too Faced and Becca, which Lauder bought in the past year, contributed 4 points to growth. Net earnings were up 45 percent to $427 million from $294 million. Diluted net earnings per common share increased 44 percent to $1.14, up from 79 cents in the year-ago period.
Skin care sales were up 16 percent to almost $1.3 billion for the quarter; makeup sales 18 percent to almost $1.4 billion; and fragrance sales 8 percent to $476 million. Hair care sales were flat at $136 million in sales.
In skin care, net sales increased because of double-digit gains from Estée Lauder, La Mer, Glamglow and Origins. The Lauder brand grew in China and travel retail because of its Advanced Night Repair franchise and new Advanced Night Repair Eye Concentrate Matrix. La Mer’s gains were driven by the Genaissance franchise, Moisturizing Matte Lotion, and an expanded consumer reach, according to the company. Glamglow’s sales increased because of a bigger product assortment, as well as targeted consumer reach. Origins’ sales bump was due to Asia, travel retail, face masks and moisturizers. Clinique and Aveda posted lower sales.
The Too Faced and Becca acquisitions drove sales in the makeup category, along with double-digit increases from Tom Ford and the Lauder brand. MAC also generated higher makeup sales, particularly in the Asia-Pacific region (China, Hong Kong and travel retail). At Tom Ford, makeup sales more than doubled, driven by its lip color products, including Tom Ford Lips & Boy and Soleil Color collections, as well as eyeshadow and foundation. At the Lauder brand, sales were boosted by the Double Wear and Pure Color Lip lines. The U.S. posted lower makeup sales, primarily from Clinique and Bobbi Brown, which Lauder said reflected the soft retail environment. Smashbox also declined.
Fragrance sales were up because of double-digit gains at Jo Malone London, Tom Ford and Le Labo. Jo Malone posted double-digit sales gains in every region with strong growth from existing fragrances, expanded consumer reach and the launch of the English Oak fragrances. Tom Ford’s Signature and Private Blend fragrances are growing; Le Labo’s growth was driven by new and existing products. Certain designer and Estée Lauder fragrances offset gains in the luxury segments.
Hair Care sales were flat, with moderate growth from Aveda and Bumble and bumble offset by lower hair-care sales at Origins. Bumble recently launched at Ulta, helping sales. Aveda’s online sales were strong, but sales at freestanding stores were lower.
“Building on the global momentum of the last fiscal year, we benefited from a continued acceleration in China, Hong Kong, travel retail and global online, strength in several developed and emerging markets in Europe, and incremental sales from Too Faced and Becca,” said Fabrizio Freda, president and chief executive officer.
“Our online and travel retail channels and most luxury and mid-sized brands posted double-digit sales gains,” he continued. “In addition, we saw encouraging signs of improvement in some U.S. prestige department stores, and our targeted expansion into more specialty-multi doors to reach new consumers continued to help us gain share.”
Lauder raised its financial guidance for fiscal 2018 to constant currency sales growth between 8 percent and 9 percent, and constant currency earnings per share growth, before restructuring charges, to 12 percent to 14 percent.