Estée Lauder released its fiscal 2020 results ending June 30 that show a net sales decrease of 4% from $14.86 billion in fiscal 2019 to $14.29 billion, reportedly as a result of retail store closures due to the pandemic, according to the company.
Net earnings reportedly also dropped from $1.79 billion last year to $0.68 billion.
According to its fiscal report, the skin care category exceeded sales compared to any other category with a 26% increase in the first half of the fiscal year and a fiscal 2020 gain of 13%. The makeup, fragrance and hair care categories experienced declines ranging between 11% and 17% for the year.
Fourth Quarter Results
Estée Lauder also reported its fourth quarter results which showed a net sales decrease of 32% to $2.43 billion compared from $3.59 billion in the prior year.
The company reported a net loss of $0.46 billion, compared to a gain of $0.16 billion in the prior-year.
In the prior-year period, results included restructuring and other charges and changes in contingent consideration that totaled $105 million, as compared to 2020 results that totaled $334 million.
Sales Outlook Q1 2021
Reported net sales for the first quarter of 2021 are forecast to decline between 12% and 13% compared to the prior-year period. Estée Lauder's recent acquisition of Dr. Jart+ is expected to contribute approximately 2.5% to the overall sales growth.
Excluding the impact of the acquisition and 1% negative impact from currency, net sales are forecast to decrease between 14% and 15%.
Cutting Retail & Jobs
In response to shifts in the distribution landscape and consumer behavior caused by the pandemic, Estée Lauder has implemented a Post-COVID Business Acceleration Program has is reportedly a two-year initiative that will help rebalance investments.
Under the plan, Estée Lauder plans to reduce between 1,500 to 2,000 position globally, as well as close 10-15% of its stores globally and department store counters.
The Post-COVID Business Acceleration Program is expected to yield annual sales of $300 to $400 million.
Key actions of the program include:
- Realignment of the company’s distribution network, reflecting certain department store closures and freestanding store closures while accelerating the shift to online.
- Further investment in digital capabilities, omnichannel, talent, and advertising and promotional activities to support continued share improvement and business acceleration.
- Implementing increased confident beauty practices at retail and adoption of new ways of working.