The Estée Lauder Companies Posts Growth Despite Ongoing Challenges

Growth in the United Kingdom and emerging markets, luxury and makeup brands, and online, specialty-multi and freestanding store channels drove third-quarter sales for The Estée Lauder Companies.

In constant currency, net sales rose 1% year-over-year to $2.58 billion. Net earnings for the quarter rose 28% to $272.1 million, compared with $213.2 million last year. Excluding the impact of foreign currency translation, net sales increased 8% and diluted net earnings per common share rose 49%.

Net sales and operating income in each of the company’s product categories were negatively impacted by the strength of the U.S. dollar in relation to most currencies.

Highlights included:

  • Skin care net sales decreased, with sales driven by products such as Advanced Night Repair Eye Synchronized Complex II and Re-Nutriv Ultimate Diamond products, as well as the Clinique Smart custom-repair serum and the Clinique Sonic System Purifying Cleansing Brush. Origins and La Mer also played a positive role.
  • Makeup sales grew primarily due to strong growth from new launches and expanded distribution for the company’s makeup artist brands and the recent launch of Beyond Perfecting foundation and concealer from Clinique. Sales in the category also reflect strong double-digit growth from Smashbox and the Tom Ford line of cosmetics. 
  • Fragrance sales decreased due to the negative impact of foreign currency translation and lower sales of certain designer Estée Lauder and Clinique fragrances. Michael Kors and luxury brands Jo Malone London and Tom Ford recorded strong double-digit sales gains as a result of new product launches and expanded distribution.
  • The hair care category’s growth benefited from expanded global distribution, primarily in salons and freestanding stores for Aveda and from specialty-multi brand retailers and salons for Bumble and bumble. Hair care net sales growth also reflects the recent launches of Smooth Infusion Naturally Straight by Aveda and the expansion of Bumble and bumble’s Hairdresser’s Invisible Oil line of products. Hair care operating income decreased, primarily reflecting higher investment spending to support new product launches and freestanding store expansion.
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