On Wednesday The Estée Lauder Cos. reported financial results for its first quarter ending September 30, 2018. Net sales for the time period were $3.52 billion, an 8% increase compared with the prior year, with net sales growth in nearly all product categories, geographic regions and channels.
Net earnings rose 17% to $500 million.
Fabrizio Freda, President and Chief Executive Officer, said, “Our creative innovations and high-quality products resonated strongly. We attracted new consumers and increased engagement with existing ones through successful digital advertising and influencer activities.”
Top growth drivers were skin care globally, the Asia/Pacific region and emerging markets, the global online and travel retail channels, and most brands, including Estée Lauder, M•A•C, La Mer, Tom Ford and Origins. In the U.S., excluding Bon-Ton closures, performance among department stores turned positive.
Product category highlights during the quarter are listed below.
- Skin care net sales grew across most geographies, channels and brands, particularly in Asia, travel retail and online.
- Growth at La Mer was broad-based, with net sales increasing across every region and channel, driven by higher net sales of existing products, incremental net sales from new product launches, including The Treatment Lotion Hydrating Mask, and expanded targeted consumer reach.
- Growth at the Estée Lauder brand reflected innovation, including the launch of Advanced Night Repair Eye Supercharged Complex.
- Operating income increased sharply, primarily from La Mer and Estée Lauder, reflecting higher net sales.
- Growth in makeup was primarily driven by strong increases from M•A•C, Estée Lauder and Tom Ford Beauty. These increases were partially offset by lower net sales for Clinique and Smashbox.
- M•A•C grew high-single digits, led by several launches, including shade extensions of its Studio Fix foundation and Powder Kiss lipstick, as part of its effort to focus on bigger innovations.
- Estée Lauder generated solid double-digit growth, driven by strength from its Double Wear line of products.
- Net sales from Tom Ford Beauty increased double-digits, primarily driven by its lip color and eye shadow franchises.
- Makeup operating income declined, reflecting lower net sales at Smashbox and planned investments at Too Faced to support new and existing products, as well as international expansion. This decline was partially offset by increases at M•A•C and Estée Lauder, primarily due to higher net sales.
- Increased net sales from Tom Ford Beauty reflected the continued success of Private Blend fragrances and the launch of Ombre Leather. Jo Malone London’s net sales increase primarily reflected the launch of Honeysuckle & Davana and expanded targeted consumer reach, including the brand’s opening on Tmall in China.
- Le Labo and By Kilian net sales benefitted from expanded targeted consumer reach. By Kilian’s growth was also driven by new launches.
- Fragrance operating income declined, reflecting timing of shipments and investments in advertising to support certain designer fragrance launches.
- Hair care net sales increased, primarily reflecting higher net sales from Aveda, due to continued growth from the Invati Advanced line of products and the launch of Cherry Almond Softening Shampoo and Conditioner.
- Hair care operating income declined, as higher results from Aveda were more than offset by advertising investments to support launches in Bumble and bumble’s Thickening franchise.