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Lauder Sees 10% Sales Increase for $2.49 Billion Net in Q2 2011

Posted: February 8, 2011

The Estée Lauder Companies Inc. reported financial results for the second quarter ended Dec. 31, 2010, that were sharply higher than the prior-year period. For the quarter, the company had net sales of $2.49 billion, a 10% increase compared with $2.26 billion reported in the prior year. Excluding the impact of foreign currency translation, net sales increased 11% from a year ago. Fabrizio Freda, president and CEO, said, "Our outstanding performance this holiday season demonstrates that we have the right strategies, product innovation and high-touch services in place for continued profitable growth. Consumers' appetite for our brands was fantastic and garnered strong sales and profit gains. We successfully leveraged our broad-based growth with meaningful improvements in operating margin over the prior-year quarter.

"As we continue our strategic journey, we are learning what has worked and what needs refinement. Throughout the year we will invest more resources in those areas that are winning and capable of generating sustainable, profitable growth. Our company's second-quarter results cap a strong fiscal 2011 first half, and we believe we are well positioned to achieve another successful year.”

During the quarter, the company's performance was better than anticipated, due to stronger overall holiday business, particularly from the company's largest brands, as well as from a weaker U.S. dollar. The company posted sales gains in each of its geographic regions and product categories. Sales growth was led by its international businesses, particularly in travel retail and emerging markets. These results reflect solid increases from higher-margin product launches and the positive impact of more effective advertising spending.

Product Categories

Skin Care. The skin care category is a strategic priority for the company, and skin care net sales grew in each of the company's regions. Across each region, the Estée Lauder brand had strong sales from the recent launches of Advanced Night Repair Eye Synchronized Complex and Re-Nutriv Ultimate Lift Age- Correcting Collection. Contributing to the increased sales were the successful recent launches of Even Better Clinical Dark Spot Corrector, Repairwear Laser Focus Wrinkle & UV Damage Corrector and All About Eyes Serum De-Puffing Night Massage from Clinique. The Regenerating Serum and The Eye Balm Intense, recent product launches from La Mer, as well as other successful products from La Mer, also contributed incremental sales. These sales gains were partially offset by lower sales from existing products.

Makeup. Makeup net sales grew in each geographic region. The majority of the sales increase came from the company's makeup artist brands, which included incremental sales from the acquisition of the Smashbox brand in July 2010. The higher makeup sales reflected increases across a broad range of products, such as the recent launches of new Pure Color eye products from Estée Lauder and Acne Solutions Liquid Makeup and Redness Solutions Makeup SPF 15 from Clinique. Partially offsetting these increases were lower sales of Prescriptives products, due to the brand's exit from global wholesale distribution after the prior-year period, and from existing products of other brands. Operating income increased, primarily reflecting improved results from certain of the company's heritage brands and from its makeup artist brands.