The Estée Lauder Companies has announced its second quarter 2023 results which showed net sales were $4.62 billion, a decline of 17% from $5.54 billion in the previous year.
Gross profit for the second quarter was $3.40 billion, as compared to $4.31 billion in the previous year.
The company's six month results showed net sales were $8.55 billion, a 14% decrease compared with $9.93 billion in the previous year.
Gross profit for the six month period was $6.30 billion, as compared to $7.65 billion in the previous year.
Net sales for the skin care segment in Q2 were $2,382 million, as compared to $3,159 million in the previous year.
Net sales growth from The Ordinary and Bobbi Brown was offset by declines from Estée Lauder, La Mer, Dr.Jart+ and Clinique.
Net sales from The Ordinary grew double digits across every region, reflecting growth in hero products, successful innovation, such as New! Multi-Peptide Lash & Brow Serum and increased productive distribution.
Net sales for the makeup segment in Q2 were $1,268 million, as compared to $1,386 million in the previous year.
Net sales growth from M·A·C and Clinique was offset by declines from Estée Lauder and Tom Ford Beauty.
M·A·C double-digit net sales growth reflected continued success from hero products, such as Studio Fix foundation, and recent launches, including Powder Kiss Velvet Blur Slim Stick lipstick, as well as strong 11.11 Global Shopping Festival performance and holiday demand.
Net sales for the fragrance segment in Q2 were $775 million, as compared to $799 million in the previous year.
Net sales from Le Labo rose strong double digits, reflecting growth in every region due to the continued consumer demand for the brand’s artisanal offerings, robust holiday performance and targeted expanded consumer reach.
Tom Ford Beauty net sales grew double digits, fueled by growth in existing hero franchises like Oud Wood and Ombre Leather and recent launches, such as Noir Extreme Parfum.
Net sales for the hair care segment in Q2 were $182 million, as compared to $180 million in the previous year.
Aveda’s net sales growth reflected strength in Europe, the Middle East & Africa, the launch of the brand in mainland China and strong performance during holiday and key shopping moments.
Q3 2023 Outlook
Reported net sales are forecasted to decrease between 14% and 12%, as compared to the previous year.
Full Year 2023 Outlook
Reported net sales are forecasted to decrease between 7% and 5%, as compared to the previous year.
Fabrizio Freda, president and CEO said:
We delivered on our expectations for the second quarter of fiscal 2023, despite the incremental pressure of COVID-19 in China in December. Many developed and emerging markets around the world outperformed to realize our organic sales growth outlook and, given disciplined expense management and moderation of the stronger U.S. dollar, we exceeded our adjusted diluted EPS outlook. Fragrance excelled globally, while Makeup prospered in a great number of markets, as our brands are realizing the promise of the category’s renaissance as usage occasions resume.
For fiscal 2023, we are lowering our outlook given the November and December disruption to travel and staffing levels in Hainan that slowed the expected normalization of inventory and the recently-announced potential roll-back of COVID-related supportive measures in Korea duty free. Together, these are creating a near-term, transitory pressure to our travel retail business. In the third quarter, this is more than offsetting the initial positive impact from the resumption of international travel by Chinese consumers, as well as favorable trends from our second quarter results, including outstanding performance across many developed markets in Western Europe and Asia/Pacific, as well as many emerging markets globally, and a less onerous currency environment. All told, our return to growth has shifted to the fourth quarter. We remain focused on investing in our brands, including for innovation, advertising, and entry into new countries, among others, to fuel our multiple engines of growth strategy.
We are encouraged by both our strong momentum in numerous markets globally and improving macro trends. Moreover, so far this fiscal year, we have made exciting progress on several strategic initiatives to drive growth and resiliency in our business, with the opening of our China Innovation Labs as well as our first-ever manufacturing facility in Asia/Pacific, and with our deal to acquire Tom Ford, to name just a few. We have great confidence that we will emerge from this year even better positioned to realize the long-term growth opportunities of global prestige beauty.