Skin Care Drives Estée Lauder Sales Gains Over Holiday Quarter

The Estée Lauder Cos. said sales gained 5 percent over the holiday quarter, fueled by a massive jump in skin care sales.

“We are proud to have returned to growth in our second quarter, earlier than we anticipated, demonstrating the enduring success of our multiple engines of growth strategy,” said Lauder president and chief executive officer Fabrizio Freda in a statement. “The powerful engines of skin care, fragrance, Asia/Pacific, travel retail in Asia and global online fueled our performance despite the increasing complexity of the pandemic.”

Freda said that 10 of Lauder’s brands grew during the quarter, and that the business was able to develop relationships with new customers from holiday shopping events. Online sales were particularly strong, and even though most stores were back open despite the coronavirus pandemic, foot traffic was down, Lauder said.

The company’s net sales were $4.85 billion for the quarter ended Dec. 31, up from $4.62 billion in the prior-year period. Net earnings were $873 million, up 56 percent year-over-year from $557 million. In the prior-year period, Lauder had recorded an impairment charge related to Too Faced, Smashbox and Becca.

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Skin care sales for the quarter spiked 28 percent year-over-year, to $2.8 billion. For the quarter, that segment was more than double the size of Lauder’s makeup business, which saw a 25 percent contraction in the quarter to $1.2 billion. That decline was attributed to the coronavirus pandemic, which has caused foundation and lip category sales to slip. Fragrance sales were up 6 percent year-over-year to $618 million, driven by double-digit gains at Tom Ford Beauty, as well as strength at Jo Malone London and Le Labo, and hair care sales fell 5 percent to $154 million due to declines at Bumble and bumble.

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Lauder’s skin care sales were fueled by Estée Lauder, La Mer and Clinique, as well as Dr. Jart+, which contributed 7 percent to net skin-care growth, the company said. For the Estée Lauder brand, double-digit gains were led by mainland China, where Lauder said the brand was the top-selling beauty brand during Tmall’s 11.11 Global Shopping festival. Sales were also propelled by the new Advanced Night Repair Synchronized Multi-Recovery Complex and existing hero products.

At La Mer, sales in China were also a major contributor to growth. The brand grew double digits in every region, led by Asia/Pacific, and also posted gains in travel retail sales. La Mer’s sales were driven by hero products Crème de la Mer, The Concentrate and The Treatment Lotion. Lauder noted that La Mer was the top-selling luxury beauty brand during Tmall’s 11.11 shopping event.

Clinique’s growth was driven by “solution-based” products, like Even Better Radical Dark Spot Corrector+ Interrupter, the Acne Solutions line and the classic three-step system.

For the six month period ended Dec. 31, Lauder posted a 1 percent drop in sales, to $8.42 billion, with net earnings of $1.4 billion, a 21 percent year-over-year increase.

Geographically, sales were driven by the Asia/Pacific region, which saw a 35 percent increase over the holiday quarter to almost $1.8 billion in sales. Sales for Europe, the Middle East and Africa slipped 2 percent, to just over $2 billion, and sales in The Americas fell 15 percent, to just over $1 billion.

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