Sales of makeup artist brands helped boost Estée Lauder’s cosmetics business, while sales at Elizabeth Arden’s new flagship doors jumped double digits—though Arden posted a loss—both firms revealed Thursday during their respective third-quarter financial reports.
Overall, sales at The Estée Lauder Cos. rose 1.9% to $2.29 billion (excluding the impact of foreign currency, net sales rose about 3%), with net earnings up 37% to $178.8 million. Skin care sales were essentially flat at $1.02 billion, while cosmetics grew 5% to $919.2 million; hair care rose 6% to $116.2 million, and fragrance inched up 1% to $233.2 million.
Estée Lauder chairman and CEO, Fabrizio Freda, noted its projection of 6% to 8% annual growth would be at the lower end this year due to a slowdown in the prestige sector, which has seen growth ease to 3% growth from 5%. Still, he pointed out, “We are growing at least two points ahead of the market.”
MAC’s Archie’s Girls cosmetics collection was a huge seller, while Clinique’s Even Better Compact Makeup and Tom Ford cosmetics also performed well. Higher-end scents from Tom Ford and Jo Malone boosted fragrance, while hair care growth was led by Aveda Invati for thinning hair.
On the horizon are new CC creams from Clinique and Smashbox, along with the introduction of a new Clinique Dramatically Different Moisturizer product. The company has also just added the Soleil De La Mer sun care range.
Meanwhile, net sales at the Elizabeth Arden Company rose 10.5% to $264.5 million, (or 11.2% excluding currency fluctuations). North America net sales increased 9.4% while international rose 14%. Net income slid $1.27 million from $2.19 million in the year-ago period, in part due to lower margins in the mix of products sold.
The company has continued the expansion of its restaged Elizabeth Arden brand, which debuted in 50 flagship doors last fall. Sales at the North America flagships climbed 22%, while the international flagships grew 18%, driven by skin care and color. Now, the best working elements are being introduced to an additional 200 doors, with more expansion being planned. Despite the huge gains, total Elizabeth Arden brand sales grew 1% due to declines in Australia and Korea.With a jump of 18.8%, it was the company’s fragrance business that drove growth.
“Fiscal 2013 is a year of transition as the repositioning of the Elizabeth Arden brand is a significant undertaking,” remarked E. Scott Beattie, Arden’s chairman and CEO. “We are very, very excited and confident about Arden as it builds.”
Growth in Arden’s North America business was driven by several fragrances, including Taylor Swift Wonderstruck Enchanted, Justin Bieber’s Girlfriend and Pink Friday Nicki Minaj. And all three franchises are gearing up for new prestige launches this year. A company initiative to build its fragrance business in Western Europe succeeded in growing European sales 33% in the quarter. To further drive fragrance, in July the company will unveil Untold, a new scent under the Elizabeth Arden brand.
Finally, in Brazil, where Arden has recently established a business center, the company has been testing various go-to-market strategies including a direct selling partnership for its fragrances.