Estee Lauder’s continued growth and focus on sales

By Pooja Kondhia

- Last updated on GMT

Related tags Estée lauder companies

Estee Lauder representatives, Cedric Prouve, group president and Richard W Kunes, executive vice president, gave a presentation at the Deutsche bank eighth annual global consumer conference in Paris on Tuesday 14th June 2011, focusing on the continued growth over the last few years and looking ahead with a keen eye on future sales.

The webcast was accompanied by a power-point presentation, which highlighted the company’s goals to generate further sales and cut costs as well as emphasizing their current strengths.

Financial results

Focusing on results from the last two to three years, Estee Lauder companies has seen continued growth in all aspects of its operations.

Over the last two years, the group’s most profitable businesses accounting for a large amount of total sales were found to be its skin care line and its top three brands.

Gross margin over the last two years also saw a steady increase; 74.5 percent of total sales in 2009 gross margin, this increased in 2010, with a gross margin of 76.7 percent out of total sales. The percentage is expected to rise in 2011 to approximately 78 percent.

The group has also stated the implementation of a successful cost savings program, which has saved $518 million to date. Expecting this number to rise to between $625 and $675 million, the drivers behind these cost savings has been put down to several initiatives.

The drivers mentioned are, an improved cost of goods; a reduction of SKUs; organizational changes; an outsourcing of select support functions and optimizing distribution centers.

Furthermore, operating margin trends, earnings per share and operating cash flow trends have all shown growth over the past couple of years, starting with the year 2009 and adding expected figures up to and for the year 2013.

Core strengths

The webcast identified Estee Lauder companies’ four core strengths – being driven by creativity and innovation; being different via high-touch services; tailoring to fit local relevance; and being connected digitally.

Examples of creativity and innovation were given using specific products such as Estee Lauder’s own Idealist skin tone illuminator cream for skin care; Bobbi Brown’s SPF12 lipstick range for make-up; brands such as Tom Ford and Jo Malone for fragrances; and Aveda for hair care.

Tailoring according to local relevance included the use of slightly different ads depending upon location for the same product; Clinique’s repairwear laser focus corrector marketed slightly differently in the US and Asia.

Also, the production of different products for different markets, such as the sale skin whitening cream CyberWhite, targeted at the Asian market.

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