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Estée Lauder Reports Net Sales of $2.74 Billion

Posted: February 3, 2012

The Estée Lauder Companies Inc. reported a strong financial performance for its second quarter ended Dec. 31, 2011, which was slightly ahead of the top of its previously stated guidance. For the quarter, the company had net sales of $2.74 billion, a 10% increase compared with $2.49 billion reported in the previous year's quarter. Excluding the impact of foreign currency translation, net sales also increased 10%. The company reported net earnings for the quarter of $396.7 million, a 15% increase compared with $343.9 million last year. Excluding returns and charges in the fiscal 2012 and 2011 second quarters, net sales for the three months ended Dec. 31, 2011 increased 10% to $2.74 billion and net earnings rose 13% to $401.1 million.

Fabrizio Freda, Estée Lauder Companies president and CEO, said, “The company’s strong second quarter results complete an outstanding first half performance. Our sales and profits this holiday season came in higher than planned and demonstrate the vibrancy of our brand portfolio in solid as well as soft economies. Our results were again broad based across brands, regions, categories and channels. The key drivers of our 10% sales growth were the U.S., China, travel retail and online. Importantly, we continued our consistent gross margin and operating margin improvements.

“Our flexible business model enabled us to outpace the global beauty industry. As planned, we will build on that trend with significant advertising and marketing spending behind existing product successes and upcoming introductions in the third quarter. Our underlying business continues to grow behind increased advertising and merchandising, despite softness in certain countries and currency headwinds. Reflecting our positive momentum, for the full fiscal year we are increasing our local currency sales forecast to between 9–10% and revising our earnings per share, before restructuring charges, to $2.16 to $2.23, after taking up the bottom of the range.”

The company’s strong performance was due to solid overall business, particularly from its largest brands. It had strong sales gains in every region, including the United States, and sales increased double-digits in Asia/Pacific. Sales also rose in virtually all product categories within each region. Sales growth was particularly strong in travel retail and emerging markets, along with solid gains in many developed countries.

By category, skin care saw net sales of approximately $17 million; makeup, approximately $9 million; fragrance, approximately $2 million; and hair care, approximately $2 million.

The skin care category is a strategic priority for the Estée Lauder Companies. The company gained share in this category during the quarter in certain countries in the stores where its products are sold. Skin care sales growth was strong, particularly in view of the 14% growth comparison in the prior-year period. However, these sales gains were partially offset by lower sales from certain existing products.