Estée Lauder announced net sales for the third quarter of $2.86 billion, an increase of 8 percent, boosted by incremental sales of Too Faced and BECCA. The balance of growth was driven by strong performance in several areas, most notably travel retail, online, China and the firm’s mid-sized and luxury brands.

From a geographic perspective, every region grew sales, led by Europe, the Middle East and Africa [EMEA]. Net sales rose 13 percent in constant currency in EMEA, led by a 30 percent increase in global travel retail. The substantial growth in travel retail was supported by an 8 percent increase in international passenger traffic, as well as further expansion of Lauder’s makeup and fragrance brands in the specific airports.

Net earnings rose 12 percent to $298 million, reflecting the operating income improvement and a lower effective tax rate, partially offset by higher net interest expense.

Lauder’s full year outlook for fiscal 2017 is to end with sales growth of between 6 percent to 7 percent in constant currency.

Fabrizio Freda, Estée Lauder’s President and Chief Executive Officer, commented on the success of the quarter, which was led by Becca and Too Faced, explaining that the growth for both is in the double digits in every segment they are operating. “Driving the success is actually same-door sales, and for the moment, a very small initial distribution deployment. These two brands are really strong and consumer demand is exceptional. And their recent launches are among the most successful launches in the entire marketplace.”

On top of that both brands attract new, younger consumers to Lauder’s portfolio, not to mention they have dramatically increased Lauder’s penetration in U.S. specialty stores.

On the subject of specialty, M.A.C. is slated to be available on ulta.com starting this month, followed by about 25 stores beginning in June, with more than 100 doors planned by the end of December. The locations will feature dedicated M.A.C. makeup artists in a boutique-like setting, allowing M.A.C. to provide artistry services.

In response to analysts’ concerns on cannabilization of M.A.C. sales in the new distribution channel, Fabrizio said that since specialty attracts new consumers, many of whom are millennials, cannibalization is very limited.

“The new distribution is bringing new customers. We have absolute evidence. That’s why we tested our way first with 30 doors, then in certain areas internationally. We have done this very gradually with a lot of attention. And the large majority of consumers are new to the brands.”

During the quarter, M.A.C’s performance wasn’t strong in the US and the company is looking to the fourth quarter for growth.

As far as North America performance during quarter, “brick-and-mortar channels were pretty challenged, particularly in the U.S. Excluding Too Faced and BECCA, the North America segment was down in sales, and M.A.C. was certainly a contributor to that performance,” said Tracey Travis, Executive Vice President and Chief Financial Officer at Estée Lauder.

Although M.A.C. is the number-one prestige makeup brand worldwide, it is in less than 3,000 doors, a fraction of the location of most of its direct competitors, and in some cases, in even less than 15 percent.

In the U.S., foot traffic continued to decline in brick-and-mortar department stores, Lauder’s largest domestic channel. And, Macy’s closed 68 stores, as expected.

Consumer appetite for beauty products continues to intensify, particularly in the luxury arena and in makeup, which helps fuel growth in the firm’s high-end brands and continued double-digit growth in its makeup portfolio.

Highlights from the quarter include:

  • By category, all segments except hair care posted gains for the quarter. Skin care was up 3 percent to $1.1 billion; makeup grew 9 percent to $1.3 billion; fragrance boosted 22 percent to $336 million. Hair care was down 2 percent to $126 million.

  • By geography, Lauder grew strong double digits in certain emerging markets, notably China.

  • During the quarter Lauder leveraged its luxe brands to target different consumer segments. The approach yielded outstanding results for Tom Ford, La Mer and Jo Malone. Each generated double-digit sales growth in constant currency in every region. La Mer’s new hydrating serum and brightening mask were well received and benefit from an increase in travel in Chinese consumers around the world. The brand gained share in Asia-Pacific and maintained its leading position in luxury skin care there.

  • Estée Lauder achieved solid growth globally for the second consecutive quarter, with higher sales in skin care, makeup and fragrances. The Estée Lauder brand continued to support its two key hero franchises, Advanced Night Repair and Double Wear, with new products combined with more effective marketing and communication. Both product lines posted positive growth in every region and increased double digits for the fiscal year-to-date.

  • Jo Malone and Tom Ford accelerated rapidly, particularly in travel retail.

  • Sales from e-commerce channels continued to grow, up 30 percent globally, more than twice the growth of e-commerce in general. Sales rose double-digits across brand, retailers and third-party sites, and also grew double-digits in every region, driven largely by increased traffic, order size and conversion. Mobile-driven sales rose significantly and are now a larger portion of the firm’s total mix.