Estée Lauder’s annual sales for its fiscal year ended June 30 hit $10 billion for the first time. Ecommerce, with a double-digit jump, reached a milestone half billion in sales, for the time period.
The company achieved “across-the-board sales gains in each of our geographic regions and major product categories,” commented President and Chief Executive Officer, Fabrizio Freda. “We have reached new heights of success.”
Fabrizio singled out Tom Ford, Jo Malone and La Mer, which collectively grew 20 percent, as “standout brands for the year.” The company has been growing faster than the global prestige market and anticipates it will outpace the predicted industry growth of 3 percent to 4 percent by at least 1 percent, declared Fabrizio. The company has grown 40 percent in four years.
For the year, net sales climbed 4.8 percent to $10.18 billion, with earnings up 19 percent to $1.02 billion. Excluding the impact of currency fluctuations annual sales grew 6 percent.
For the year, skin care grew 6 percent to $4.46 billion, cosmetics rose 5 percent to $3.87 billion driven by makeup artist brands, and hair care climbed 6 percent to $488.9 million, in large part to Aveda. The company is projecting sales gains of 6 percent to 8 percent in the coming year and continued double-digit earnings growth.It posted an operating margin of 15.2 percent in 2013 and has set a long-term target of 16.5 percent by 2016.
It was also a profitable quarter for Estée Lauder as the cosmetics giant posted an 84 percent increase in net income to $94 million. During the quarter revenues rose 7 percent to $2.41 billion, or 8 percent, excluding the impact of currency translations.
Developing skin care, its largest and most profitable segment, remains center stage with more innovation in the works. In July Clinique Dramatically Different Moisturizing + launched, the iconic moisturizer’s first tweaking in 45 years, as well as a reformulated Estee Lauder Night Repair serum. “There will be fewer, but bigger launches,” said Fabrizio.
Progressing in emerging markets is also a focus. China is expected to remain one of its fastest growing with plans underway to expand into 14 new cities. Since 94 percent of the population uses skin care that product segment will be at the forefront. But increasing makeup and fragrance consumption, used by 16 percent and 47 percent of the Chinese population respectively, is also on the horizon. Turning around slumping sales in Korea and breaking into mass market dominated Brazil are other identified goals.
Initiatives to reenergize the fragrance business, which grew 3 percent to $1.3 billion, are getting started. Now rolling out is Estée Lauder Modern Muse, the brand’s first major launch in a decade, while a Tory Burch fragrance unveils next month. Additionally, Tom Ford is introducing a special scent collection for Asia.