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What's Behind Estee Lauder's Positive Second Quarter 2016?

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Capitalizing on opportunities in prestige makeup, luxury beauty and rising online sales drove The Estée Lauder Companies' strong second quarter 2016 results.

President and CEO Fabrizio Freda noted, "In the holiday season, our brands achieved outstanding results from their e-commerce businesses, as well as the gift sets, services, sampling and events they offered at retail."

Previously: Estée Lauder Announces Promotions

The company reported net sales of $3.12 billion for its second quarter 2016, ended December 31, 2015, a 3% increase compared with $3.04 billion in the prior-year quarter.

Net earnings increased 2% to $446.2 million, compared with $435.7 million last year. Total operating income in constant currency, before charges, increased 11%.

Six-month net sales totaled $5.96 billion, a 5% increase compared to $5.68 billion in the comparable prior-year period. Net earnings were $755.5 million, a 14% increase compared with $663.8 million in the same period last year.

The company is continuing its forecast to grow 7% or 8% for full-year 2016.

What Was Up

Makeup sales rose as a result of:

  • makeup artist brands
  • lipstick
  • foundation
  • Smashbox
  • Tom Ford
  • Expanded channel distribution
  • Pure Color Envy and Double Wear
  • Clinique offerings such as Beyond Perfecting foundation + concealer and Pop Lip color + primer
  • Growth in Asia

Fragrance sales benefited from:

  • Jo Malone London
  • Tom Ford
  • New product launches and expanded distribution.

Hair care results rose as a result of:

  • Expanded global distribution
  • New product launches such as Shampure dry shampoo and the Thickening Tonic by Aveda

North American and Latin American sales rose, as did those in Europe, the Middle East & Africa.

What Was Down

Skin care results fell, but highlights included:

  • New Dimension
  • Re-Nutriv Ultimate Diamond eye crème.
  • La Mer
  • Origins

Results in Asia/Pacific fell due to negative impact of foreign currency translation in Hong Kong, China and Thailand. Higher costs also contributed to the results.