For the fiscal year, The Estée Lauder Cos. generated net sales of $13.68 billion, a 16 percent increase compared with $11.82 billion in the prior year. The company posted net sales growth in each major product category and each geographic region, due largely to “targeting investments to shifts in consumer and market dynamics across product categories, geographic regions, brands and distribution channels.” Net sales increased in several developed and emerging markets, and reflected strong growth from the travel retail, online and specialty-multi channels. Skin care net sales benefited from increases at Estée Lauder, La Mer, Origins and Clinique. La Mer also became the fourth brand within its portfolio to become a $1 billion brand. Makeup net sales growth was driven by increases from Estée Lauder and Tom Ford.
The company reported operating income for the fiscal year ended June 30, 2018 of $2.05 billion, a 21 percent increase from the prior year of $1.69 billion. Total operating income excluding the favorable impact of currency translation of $103 million and before charges and other adjustments, increased 15 percent, largely reflecting strong sales growth partially offset by investments made in digital and social media advertising to support long-term growth in fiscal 2019 and beyond.
Net earnings for the year were $1.11 billion, an 11% percent decline, compared with $1.25 billion last year, and diluted net earnings per common share decreased 12 percent to $2.95, compared with $3.35 reported in the prior year. The decline was due to restructuring charges.
For the three months ended June 30, Lauder reported net sales of $3.30 billion, a 14 percent increase compared with $2.89 billion in the prior-year period. The company posted net sales growth in most brands and across-the-board gains in all geographic regions and product categories. Net sales increased in several developed and emerging markets, reflecting especially strong growth from the travel retail, online and specialty-multi channels. Excluding the impact of currency translation, net sales increased 12%.
Net earnings for the quarter were $186 million, compared with $229 million last year, and diluted net earnings per common share was $.49, compared with $.61 reported in the prior-year period. Adjusted diluted net earnings per common share rose 20% to $.61, and 11% in constant currency, for the three months ended June 30, 2018, excluding restructuring and other charges and adjustments, the impact of the new tax law in the United States and the effect of currency translation, as detailed in the table below.
• Skin Care net sales increased double-digits in every geographic region. Growth was particularly strong in Europe, the Middle East & Africa, travel retail, and China. By brand, the Estée Lauder, La Mer and Clinique brands were the largest contributors to growth.
• Operating income increased primarily from Estée Lauder and La Mer, reflecting higher net sales in Asia/Pacific and Europe, the Middle East & Africa, with the strongest growth in China and travel retail.
• Makeup net sales increased. Strong double-digit growth from Estée Lauder, Tom Ford, Too Faced, BECCA and La Mer were partially offset by declines from MAC and Clinique.
• Makeup operating income declined primarily due to lower operating results from MAC that mainly reflected investments to support its turnaround in North America, stock adjustments in the Middle East, and higher advertising in Asia/Pacific to drive net sales in the fast-growing region.
• Higher fragrance net sales reflected growth across all geographic regions. Jo Malone London, Tom Ford and Le Labo all had strong double-digit gains.
• Fragrance operating results improved, reflecting higher net sales from Tom Ford, primarily in North America, as well as the Europe, the Middle East & Africa region, which benefited from strong growth in travel retail. By Kilian also contributed to the growth. The category performance also reflected a decline from Estée Lauder fragrances in the United States.
• Hair care net sales increased primarily due to the successful launch of new Aveda products.
• The increase in hair care operating income reflected the higher net sales.