Skin care stands out as Estée Lauder reports sales and profits are up

By Andrew MCDOUGALL

- Last updated on GMT

Related tags Estée lauder Skin care Revenue Cosmetics

Skin care stands out as Estée Lauder reports sales and profits are up
A resurgence in skin care sales and a good performance in the US helped cosmetics giant Estée Lauder post an increase in profit for its third quarter ended March 31, 2012.

Having not expected such figures, the company posted net sales of $2.25bn, a four percent increase, and net earnings for the quarter of $130.4m, a five percent increase compared with $124.7m last year.

“Driving our performance are focused investments on our distinctive product innovations, supported by strong creative capabilities and elevated high-touch services,”​ said president and CEO Fabrizio Freda.

“On the strength of our brands, we posted across-the-board sales gains in our regions, strong skin care growth and increases in most channels, while further generating substantial gross margin improvements.”

Skin care stands out

Skin care was the standout segment for Estée Lauder, posting a nine percent sales increase; particularly aiding growth in the US market.

Geographically, the Americas saw the largest growth, reporting a five percent sales increase, which the company said was mostly due to strength in the US, where new products were met favorably.

Canada and Latin America also posted sales growth, whilst sales for Europe, the Middle East and Africa rose four percent, and Asia/Pacific sales climbed two percent.

“In the Americas, our greatest growth this quarter was in the high-margin skin care category, where we have put much of our focus since we began our strategy 3 years ago,”​ said Freda in a conference call.

“We had a terrific result in skin care globally, largely from several recent innovations that were backed by compelling advertising, including Estée Lauder cream for Europe and several products from Clinique,”​ he added.

In Asia, Estée Lauder’s skin care sales rose thanks to several launches, with the category accounting for approximately 65 percent of the region's sales.

Advertising strategy

The success of the skin care segment this quarter has also been attributed to the company’s advertising strategy as well as product innovation.

This will now see Estée Lauder apply the same strategy to its make-up brands in a bid to achieve the same success.

“Next week, for the first time, Clinique will start running national TV ads for a color cosmetic product in the US. We expect this creative commercial for Chubby Stick Lip Colour to attract many new consumers, particularly younger ones,”​ explained Freda,

“Our other make-up brands are also leveraging this pull strategy. Tom Ford Beauty is investing behind its new color cosmetic line. Smashbox advertised its eye shadows in Camera Ready BB Cream using print and digital during the quarter, which generated strong growth for the brand.”

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