Estée Lauder Co. continues sales streak in Asia-Pacific with 25% growth

The region’s total sales grew 25% to $966m in the quarter, causing its operating income to increase as well.

The company reported that two-thirds of the markets in the region reported double-digit growth.

Additionally, it generated double-digit sales growth in virtually every major product category and channel.

“Looking in our geographies. Asia-Pacific continued to be the major contributor to growth,” ​said Fabrizio Freda President and CEO of Estée Lauder Co.

“Nearly all countries grew, led by China, Hong Kong, and Japan, as well as Southeast Asia, particularly in emerging markets. This performance strengthened our number one position in Prestige Beauty in the region.”​

APAC leads the way​

Among the larger markets in APAC, sales in Hong Kong rose double digits while Japan sales experienced high single-digit increase.

Additionally, both Korea and Australia delivered solid mid single-digit increases.

Tracey Thomas Travis, executive vice president and CFO said the company’s sales in China experienced ‘sharp increase’ and reflected the strength of its prestige beauty brands in the market.

“Nearly every one of our brands rose strong double digits in China, as did all distribution channels,” ​she said.

Freda highlighted that the Chinese consumer continued to be integral to the company’s success.

“We developed many activities with focused products that capitalised on higher traffic during the Chinese New Year. Our Estée Lauder brand, for example, opened pop-up locations in key airports, even outside of Asia, to reach travelling Chinese consumers.”​

While the company was cautious in its outlook due to the macroeconomic and geopolitical factors around the globe, Freda highlighted that China did not slow down as predicted.

“Lastly, we factored in a gradual moderation of growth in China and Travel Retail, due to trade tensions and economy slowdown risks. While some of these risks materialised, particularly, the softness in the U.S. and the UK markets, slower growth in China and Travel Retail did not happen, which contributed to our overachievement in the third quarter.”​

Make-up soars in Asia​

While the skin care category continued to be one of the driving forces of its strong performance this year, the make-up category soared in Asia.

Makeup sales grew 7%, led by strong demand in Asia and Travel Retail.

Currently, M.A.C. is the number one prestige makeup brand on Tmall, spurred on Tmall Super Brand Day as well as its Honor of Kings collaboration with Tencent.

“In the U.S., clearly, makeup is not a growing segment at this moment. But in Asia is the fastest growing segment,”​ said Freda.

He added that makeup in China grew faster than skin care in the market last quarter.

“Makeup is a very strong category with a lot of future. And when it reaches a certain level of growth, it will have the same positive impact, allowing us to leverage our cost structure that skin care has.”​

Online growing fast ​

Another fast-growing channel, said Freda, was its e-commerce channel.

“Another fast-growing channel, our global e-commerce business, continued to thrive. And for the first time, half of our sales came from mobile devices, with the highest penetration in Asia-Pacific.”​

Tmall continued to be a large contributor to its online sales in China with Tom Ford joining as the company’s 10^th​ brand on the platform.

Freda commented that the Tom Ford launch was the company’s strongest launch yet and it is working on rolling out more brands online.

“We see terrific runway ahead of our online business expand, with many more brands to roll out in dozens of countries. M·A·C, for example, became our first brand Online in Vietnam, launching on Lazada with a store-in-store Online model, followed recently by Clinique.”​

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