The Estée Lauder Cos. posted better than expected earnings for the quarter ended June 30, but lower sales.
Earnings declined 40% to $153 million from $257.7 million for the same period last year, reflecting increased store openings, and investments in information technology and in R&D and product development, the company said. Sales fell 7% to $2.52 billion, missing the consensus of $2.57 billion. Net sales in constant currency adjusted for accelerated orders would have increased 7%, falling in line with expectations.
Sales grew in each geographic region and product categories, with the exception of skin care. Fabrizio Freda, President and CEO said, “Our sales grew at a faster rate than global prestige beauty, due to the success of our multiple engines of growth. Standout performances generated double-digit sales gains in most of our makeup and luxury brands and the online, specialty-multi and freestanding store channels. By geography, emerging markets, the United Kingdom and accelerated growth in certain developed markets were also key performance drivers.”
In the fourth quarter, accounting for 40% of total sales, skin care fell 16% to $1.01 billion for the largest decline in over two years, while sales in makeup declined 4% to $1.02 billion. Fragrance sales grew by 9% to $336.1 million in the quarter, mainly due to the luxury brands Tom Ford and Joe Malone, bucking a trend seen by other perfume manufacturers who rely on mass fragrance sales. Hair care sales rose 4% to $139.8 million.
Lauder also posted high single-digit increases in North America, which reflected good sales growth in both the US and Canada and was led by the online and specialty multi-channels, as well as improved sales to department stores.
In the US, the Estée Lauder brand is launching a special collection of makeup and skin care developed for North America Sephora stores and their millennial consumers. Called the Estée Edit by Estée Lauder, the collection will be supported by digital marketing and social media. The Estée Edit along with Estee Lauder’s best-selling skin care products will launch in March in more than 250 Sephora stores and on Sephora.com.