Estée Lauder report double digit sales increase and higher profits

By Simon Pitman

- Last updated on GMT

Luxury fragrance and cosmetics player Estée Lauder has reported a strong rise in full year and third quarter sales on the back of continued sales growth in the US, China and from its travel retail business.

Sales for the third quarter were up nine percent on a reported basis to $2.25bn, which led to a 22 percent jump in net earnings, to $52.2bn.

“A very strong fourth quarter, in which we generated double-digit growth in sales, excluding currency, and earnings per share, was driven largely by continued momentum in the U.S. and strong growth in China and travel retail,”​ said company CEO Fabrizio Freda.

Full year sales up by 10 percent

Sales for the full fiscal year 2012 sales grew by 10 percent to $9.71bn, compared to $8.81bn in the corresponding period last year, a figure that was also reported as a 10 percent increase excluding the impact of currency translation.

Fiscal full year 2012 sales also helped to push net profits, which were up 21 percent to $901.0bn.

“In fiscal 2012, we grew sales, net earnings and earnings per share by double digits. Our sales grew at twice the rate of worldwide prestige beauty, owing to the success of our highly innovative products, marketing prowess and personalized services,”​ Freda said.

Of the company’s four business divisions, the biggest gains were seen in the skin care segment, where sales for the full year grew by 14 percent on a reported basis to reach $4.22bn, while sales in the make-up division were up by 10 percent on a reported basis for the same period, to $3.69bn.

Skin care and make-up lead sales gains

For skin care the company said that the result was particularly given, given that sales gains were on top of an increase of 15 percent in 2011 fiscal year, and were mainly driven by the Estée Lauder branded launch, Revitalizing Supreme Global Anti-Aging crème.

In Make-up sales were again up on strong gains in the previous fiscal year, when sales increased by 13 percent, and were driven by the company’s artist brands, which reflected a number of new product offerings.

On a geographic basis, sales gains were more modest in The Americas, where revenues were up 8 percent for the full year to $4.10bn, while gains of 11 percent to $3.60bn were reported for the Europe, Middle East and Africa (EMEA) market, together with a rise of 14 percent to $2.01bn for the Asia Pacific market.

China, United States and Middle East show most growth

The higher sales in the Americas were accredited to the United States, Brazil, Chile and Mexico, whereas EMEA was driven by gains in the Middle East and European countries such as Germany, Italy and France. In Asia Pacific, strong sales growth was reported in Hong Kong, China and Thailand.

For the full year 2013 outlook, the company said it is forecasting sales growth at between 6 to 8 percent in constant currency, while foreign currency translation is expected to negatively impact those gains by approximately 3.5 percent. Sales gains are expected to be led by the Asia Pacific region.

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