Beauty Sales: $15.9 Billion

Major Products/Brands: Prestige cosmetics, skincare, fragrance and hair care under brands including Aerin Beauty, Aramis, Aveda, Becca, Bobbi Brown, Bumble and Bumble, Clinique, Darphin, DKNY, Donna Karan, Dr. Jart+ and Have & Be, Editions de Parfums Frederic Malle, Ermenegildo Zegna, Estée Lauder, La Mer, Glamglow, Jo Malone, Killian Paris, Kiton, Lab Series, Le Labo, MAC, Métallique, Michael Kors, NIOD, Origins, Poppy and Barley, Rodin, Smashbox, The Ordinary, Tom Ford Beauty, Tommy Hilfiger, Too Faced, Tory Burch.

New Products:

• Les Éternels de Balmain
• Aerin Amber Musk Santal
• Mediterranean Honeysuckle Tiare
• Aveda Invati Ultra Advanced Collection
• Vibe Collection
• Bumble and Bumble Bb Seaweed
• Clinique: Black Honey Collection
• Donna Karan DKNY 24/7, Cashmere Collection
• Estée Lauder Advance Night Repair Overnight Treatment
• Jo Malone Orange Marmalade, Ginger Biscuit
• Killian Born to be Unforgettable, Imperial Tea
• Le Labo Coraindre 39, Myrrhe 55
• Michael Kors Pour Femme, Michael Kors Pour Homme
• Tom Ford Electric Cherry, Vanilla Sex
• Tory Burch Essence of Dream Middle Eastern collection
• Tommy Hilfiger Tommy Girl Vibrant Summer

Comments: While The Estée Lauder Companies (ELC) reported net sales of $15.9 billion for its fiscal year ended June 30, 2023, it was a 10% decrease from its $17.7 billion in net sales the prior year.

Still, Fabrizio Freda, President and Chief Executive Officer, reported that momentum continued in EMEA and Latin America markets, with strong acceleration in Asia/Pacific. “For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in Skin Care, and we continued to experience softness in North America,” he says. “Fragrance excelled, up double digits in every region, and Makeup improved sequentially to double-digit growth in the fourth quarter as more markets emerged into the post-pandemic era.”

Category-wise, skincare accounted for 52% of sales, followed by makeup (28%), fragrance (16%), and hair care (4%).

Skincare net sales dropped 17% due to declines from Estée Lauder, La Mer and Dr. Jart+, and major challenges in the Asia travel retail business. The Ordinary was a bright spot, partially offsetting skincare declines in every geographic region, as was the launch of MAC Hyper Real products.

Makeup net sales fell 3%, primarily due to the unfavorable impact of foreign currency translation. Net sales growth from MAC and Clinique was offset by the declines from Estée Lauder, Tom Ford, and La Mer.

Fragrance net sales rose 14%, led by Tom Ford, Estée Lauder, and Le Labo, but sales were offset by the impact of the license terminations in 2022 related to certain ELC designer fragrances of 9% and the unfavorable impact of foreign currency translation of 4%.

Hair care net sales increased 6%, reflecting growth from both The Ordinary and Aveda.

2024 Highlights:

2024 was a challenging year for Lauder, which was hit with both diminished sales and falling stock prices.

The legacy company expanded its sales outreach by making its Dr. Jart+, Bumble and Bumble, Too Faced, and Clinique brand products available in the U.S. Amazon Premium Beauty store.

A bright spot was in June, when Estée Lauder Cos. completed its $1.7 billion acquisition of Deciem, owner of The Ordinary skincare brand, which Lauder had held a majority of ownership in since 2021. During a restructuring period that saw the layoff of more than 3,000 global employees, Lauder announced the appointment of Akhil Shrivastava to Executive Vice President and Chief Financial Officer in July. He succeeds Tracey T. Travis, who retired.

Peter Hawkings, Creative Director at Tom Ford, also stepped down in July. Hawkings had been with the company since its inception, and at the helm of creative since April 2023.

In August 2024, CEO Fabrizio Freda announced that he would retire at the end of fiscal 2025. He’s served at the company for 16 years. His replacement has not yet been announced.

ELC continues to make progress with its sustainability goals. As of fiscal 2023, and excluding recent acquisitions, 71% of its packaging by weight is now recyclable, refillable, reusable, recycled, or recoverable.

Looking Ahead:

For fiscal 2024, Freda said he expected a return to organic sales growth and sequentially improving margins throughout the year. “We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America,” he said. “In Asia travel retail, we are taking actions to capture demand from the returning individual travelers and continuing to reduce inventories in the trade as we navigate the current market headwinds.

“In this new fiscal year, we also intend to set the stage for a stronger fiscal year 2025 acceleration, with a very robust innovation pipeline planned across the two years, and progressive margin rebuilding plans.”

According to ELC’s Q3 report, net sales had dipped 5% to $11.7 billion. And although the company projected a sales increase of 5-9% for Q4 2024 versus Q4 2023, it expected a full year net sales to reflect a 3-2% decrease compared to 2023.

Beauty Sales: $15.9 billion

ELC Products: The Estée Lauder Companies (ELC) sells cosmetics, skincare, fragrances, and hair care in approximately 150 countries and territories.

Brands include:

• Estée Lauder, Aramis, Clinique, Lab Series
• Origins, M·A·C, La Mer, Bobbi Brown Cosmetics
• Aveda, Jo Malone London, Bumble and bumble
• Darphin Paris, Tom Ford, Smashbox, Aerin Beauty
• Le Labo, Editions de Parfums Frédéric Malle, Glamglow, Killian Paris
• Too Faced, Dr.Jart+, Deciem’s The Ordinary and Niod

New Products:

• La Mer The Treatment Lotion
• Clinique Smart Clinical Repair Wrinkle Correcting Serum
• Too Faced Crowd Crush Blush and Cheek Popper
• MAC Studio Radiance Serum-Powered Foundation
• Estée Lauder Double Wear Sheer Long-Wear Makeup
• Jo Malone House of Roses and the Blossoms Collection, Thé Matcha 26
• Aveda Color Control Leave-In Treatment

Acquisitions:

• Tom Ford Beauty
• Balmain Beauty (2024)

Sales Outlook

In 2022-23, The Estée Lauder Companies (ELC) hit a pandemic-based bump in the global prestige beauty road. Due primarily to the slower-than-expected pace of recovery in Asia travel retail (China and Korea) and mainland China, ELC reported a 10% net sales decline in the fiscal year ending June 30, 2023—but, regardless, still achieved healthy net sales of $15.91 billion (down 10% from $17.74 billion in FY22). 

Net earnings for the fiscal year declined to $1.01 billion, from $2.39 billion in the prior year. In Q4 of FY23, ELC reported net sales of $3.61 billion, up 1% compared to the corresponding period in fiscal 2022. Driven by strong growth in Asia/Pacific, the company’s organic net sales increased 4%.

Upon issuing the annual report, Estée Lauder president and chief executive officer Fabrizio Fredo said:

“We returned to organic sales growth in the fourth quarter, delivering our outlook. Momentum continued in the markets of EMEA and Latin America and accelerated strongly in Asia/Pacific led by mainland China and Hong Kong SAR.

“For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in Skin Care, and we continued to experience softness in North America. Fragrance excelled, up double digits in every region, and Makeup improved sequentially to double-digit growth in the fourth quarter as more markets emerged into the post-pandemic era.”

Tracking Sales, By Category & Brand

Net sales by product category were: Skincare (52%; $8.2 billion); Makeup (28%; $4.5 billion); Fragrance (16%; $2.5 billion); Hair Care (4%; $650 million).

Other than the negative impact from Covid in Asia, ELC says the recovery from the pandemic elsewhere progressed across markets globally over the course of the fiscal year as restrictions lifted. In the West, they reported strong organic net sales growth in nearly all markets in EMEA and in Latin America. In Asia/Pacific, ELC’s markets delivered “broad-based organic net sales growth throughout the region.”
 â€¨

In the U.S., organic net sales growth was unfavorably impacted by the slower than anticipated pace of ELC’s improvement at retail and the tightening of inventory by certain retailers in the first half of fiscal 2023 due to inflationary pressures and recession concerns. In addition, the company’s business was also pressured by the strong U.S. dollar, inflation and recession concerns globally.


Skincare net sales fell 14%, primarily due to the dip in Asia travel retail, as previously mentioned. Net sales declined for Estée Lauder, La Mer and Dr.Jart+, partially offset by strong growth from The Ordinary, M·A·C and Bobbi Brown Cosmetics.
 â€¨

Makeup net sales were flat compared to the prior year and performance increased sequentially each quarter, to growth of 13% in the fiscal 2023 fourth quarter, reflecting growth in most markets and a return to social experiences as Covid waned.

Net sales growth from M·A·C and Clinique was offset by the declines from Estée Lauder, TOM FORD and La Mer.
 â€¨Fragrance net sales rose 14%, reflecting double-digit growth across every region and led by TOM FORD, Estée Lauder and Le Labo.
 â€¨Hair Care net sales rose 6%, primarily reflecting growth from both The Ordinary, due to the recent launch of the brand’s hair care products, and Aveda.

By Geographic Region

The Americas accounted for $4.5 billion; Europe, the Middle East & Africa, $ 6.2 billion; and Asia Pacific, $5.2 billion.

ELC 2022-2023 Highlights

Thinking outside the box and hedging its beauty bets with fashion trends, at the end of 2022, The Estée Lauder Companies Inc. announced it would acquire luxury brand Tom Ford for $2.3 billion.

The deal ended a months-long rumor, in which ELC beat out Kering for the largest luxury acquisition of the year. ELC subsequently licensed the premium brand (fashion and eyewear) to Ermenegildo Zegna Group and Marcolin S.p.A. The acquisition was completed in March 2023, and ELC became the first global beauty brand to own a global fashion brand.

In May, as ELC lowered its annual year expectations, the company was hit with rumors of a Nelson Peltz overhaul plan and a possible ousting of CEO Freda—both later proved false.

In June, ELC announced the launch of a new Responsible Store Design Program developed “to advance progress toward its environmental targets while engaging its consumers in the journey.” The first Origins store in this style has been completed.

In July, the global beauty company confirmed that an unauthorized third party had gained access to some of its systems in a cybersecurity attack.

In August, 90-year-old Chairman Emeritus Leonard A. Lauder informed The Estée Lauder Companies that he would not stand for re-election to the company’s board of directors at the annual meeting in November. His son William, executive chairman of ELC, and younger son Gary Lauder, manager of a VC firm, will step in.

Also in August, MAC launched a new liquid foundation, its first in a decade. MAC’s Studio Radiance Serum-Powered Foundation combines the hydrating benefits of a serum with a liquid foundation to deliver ‘expensive-looking skin’. Available in 56 shades, the hybrid product was five years in the making.

At press time, looking to gain ground in Asia, ELC invested in Code Mint, a Chinese homegrown clean beauty brand founded in 2021 by influencer Grace Chow. It is reportedly the international beauty giant’s first investment in a Chinese brand.

Looking Ahead

For full year 2024, the company says it anticipates net sales to increase between 5% and 7% from the previous fiscal and organic sales to grow between 6% and 8%.

Then, over the next few years ELC plans to “progressively rebuild its margins.” It also plans to continue to strategically invest in areas to support recovery, share gains and long-term profitable growth.
 â€¨Reported net sales for fiscal 2024 are forecasted to increase between 5% and 7% versus the prior year.

Beauty Sales: $17.7 billion

Major Brands/Products: More than 25 prestige skincare, makeup, fragrance and hair care brands sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, M·A·C, La Mer, Bobbi Brown, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, Tom Ford Beauty, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frédéric Malle, Glamglow, Kilian Paris, Too Faced, Dr.Jart+, Deciem, Haeckels.

New Products: Estée Lauder Perfectionist [CP+R] Wrinkle Lifting/Firming Serum, Estée Lauder Double Wear Sheer Long-Wear Makeup, Estée Lauder Luxury Fragrance Collection, La Mer The Micro Peel, Crème de la Mer Hydrating Infused Emulsion, MACStack mascara, Jo Malone London Night Collection Lavender & Moonflower Pillow Mist; Tom Ford Tom Ford Research Intensive Treatment Emulsion; Tom Ford Ombre Leather Parfum, Le Labo Thé Matcha 26; Aveda Nutriplenish Styling Treatment Foam.

Comments: Global omnichannel capabilities were key to success at The Estée Lauder Companies Inc. (ELC), which reported net sales of $17.74 billion for its fiscal year ended June 30, 2022—an increase of 9% from $16.22 billion in the prior-year period. Organic net sales increased 8%, driven by double-digit growth in The Americas and Europe, and the Middle East & Africa (EMEA) regions. A “post-Covid-19” recovery in brick-and-mortar retail stores, as well as double-digit growth in global online sales and growth in travel retail boosted the bottom line and kept the prestige beauty giant in its No. 3 slot on Beauty Packaging’s Top 20 list.

ELC reported net earnings of $2.39 billion, compared with net earnings of $2.87 billion in the prior-year period.

Commenting on the year, Fabrizio Freda, president and chief executive officer, ELC, said, “We delivered excellent results in fiscal 2022, exceeding our expectations in the fourth quarter and achieving record revenue and profitability on an adjusted basis for the year. Our multiple engines of growth strategy proved invaluable amid pandemic and macro complexity, affording us the diversification to seize growth of the moment. The Americas and EMEA prospered, Fragrance soared, and Makeup realized the promise of its emerging renaissance.

“La Mer, M·A·C, and Jo Malone London led the contribution of double-digit organic sales growth by nine brands, impressive on its own and especially so given the significant pressure from Covid-19 in Asia/Pacific at the end of the year. Brick-and-Mortar and Online each grew globally, as we capitalized on reopening, extended our consumer reach in high-growth channels, and amplified our omnichannel capabilities.”

By category, Skincare held its No. 1 place as ELC’s most lucrative product category at nearly $9.9 billion in net sales for the year. Makeup at $4.7 billion was next, followed by Fragrance (which rose a remarkable 30% to $2.5 billion); and Hair Care ($639 million).

Skincare Sales Fluctuate

Skincare net sales grew in The Americas, which was offset by a decline in the EMEA region. Net sales growth from La Mer, Clinique and Bobbi Brown was offset by a decline from Estée Lauder.

Double-digit growth from La Mer was driven by strength among Chinese consumers in both mainland China and travel retail. Net sales growth reflected increases in hero products, including Crème de la Mer and the upgrade to The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in mainland China, also contributed to growth.

Clinique net sales growth was driven by strong demand for its hero products, including the Take The Day Off line of products and Even Better Clinical Radical Dark Spot Corrector + Interrupter. Bobbi Brown also reported strong double-digit skincare net sales growth in every region, led by robust demand from Chinese consumers. Meanwhile, Estée Lauder skincare net sales declined, reflecting challenges in the second half of fiscal 2022 due to the resurgence of Covid-19 cases in Asia, the closure of distribution facilities and increased restrictions. Estée Lauder was “disproportionately impacted” by the temporarily reduced capacity at the company’s distribution facilities in Shanghai in the fourth quarter.

Hero Products Boost Makeup

With many masks off, continued recovery in Western markets led to an increase in Makeup net sales among most brands. Both M·A·C and Estée Lauder led the growth. Hero products such as M·A·C’s Studio Fix, the launch of MACStack mascara, and effective social media campaigns contributed to the category’s successful rejuvenation. Double-digit net sales growth from Estée Lauder was fueled by the Double Wear and Futurist foundation product lines, as well as the successful launch of Double Wear Sheer Long-Wear Makeup.

Fragrance Brands Deliver

ELC’s net sales grew across every region and every fragrance brand, led by Jo Malone London, Tom Ford Beauty and Le Labo.

Jo Malone London’s net sales grew strong double digits, thanks to colognes, and hero franchises like English Pear & Freesia as well as the launches of House of Roses and the Blossoms Collection. Bath & Body and Home also delivered strong growth during consumers’ pent-up period.

Tom Ford Beauty grew strong double digits, due to strength in its Signature and Private Blend fragrances, including Black Orchid and Oud Wood. The launch of Ombre Leather Parfum was also a hit.

Le Labo also grew strong double digits with growth in all regions, and largely due to the recovery of brick-and-mortar, improved retail traffic, and targeted expanded consumer reach. Hero fragrances, such as Santal 33, as well as the successful launch of Thé Matcha 26, contributed to success.

Hair Care’s Growth

Hair care net sales rose across every region, reflecting increases from both Aveda and Bumble and bumble as brick-and-mortar recovered from prior-year closures related to Covid-19 through much of the world.

Aveda’s growth reflected the continued success of its hero franchises, including Botanical Repair and Nutriplenish, as well as the relaunch of Full Spectrum Semi-Permanent Treatment Hair Color and the launch of Botanical Repair Strengthening Overnight Serum.

Net Sales by Region

Net sales grew in every region except for a small dip in Asia Pacific. Total EMEA net sales led the way at nearly $7 billion. The Americas landed the year with nearly $4.7 billion, while Asia/Pacific contributed $5.4 billion.

EMEA net sales grew in nearly every market, led by the UK. The growth reflects strong double-digit recovery in brick-and-mortar. Net sales grew double digits in makeup, fragrance and hair care.

Global travel retail net sales increased year-over-year reflecting continued growth from Asia/Pacific despite increased travel restrictions beginning in March 2022 that particularly impacted Hainan.

In the Americas, net sales grew strong double digits in the U.S., Canada and Latin America as brick-and-mortar retail traffic recovered during the year. Net sales increased in every product category and in nearly every distribution channel. Brick-and-mortar net sales increased strong double digits, benefiting from the year-over-year increase in open retail locations, as well as improved traffic.

In North America, net sales growth was led by “makeup-starved” consumers, happy to be social again post-quarantine, as well as continued growth in fragrance. In Latin America, net sales also grew in nearly every market and product category.

Asia/Pacific saw a slight sales decline, mostly due to pandemic-related issues. Net sales declines in makeup and skincare were partially offset by net sales growth from fragrance and hair care in the region. Net sales declined in brick-and-mortar due to soft traffic in areas most impacted by rising cases of Covid-19, but were offset by strong double-digit online growth partly offset the decline in brick-and-mortar.

In mainland China, net sales remained relatively flat year-over-year as the impact from the rise in Covid-19 restrictions was mostly offset by very strong growth in the first half of fiscal 2022. Net sales benefited from successful programs during key shopping events, including the 11.11 Global Shopping Festival and the 6.18 Mid-Year Shopping Festival, where the Estée Lauder brand was ranked the No.1 prestige beauty flagship store on both Tmall and JD.

2021-2022 Highlights:

In September 2021, ELC announced they were winding down their Designer Fragrance Licensing Division. The beauty group’s Aramis and Designer Fragrances (ADF) division had licensing contracts with Donna Karan, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna, all of which will come to a close in June 2023.

In a statement, ELC said the move “will enable us to fully dedicate our attention and resources to our powerful and winning luxury and prestige fragrance portfolio, including Tom Ford Beauty, Jo Malone London, Le Labo, AERIN, EDPFM, KILIAN Paris, Estée Lauder and Clinique.”

ELC also announced its intention to shutter two brands, Becca Cosmetics and makeup, skin and body care line Rodin Olio Lusso.

After 27 years with The Estée Lauder Companies, Cedric Prouvé, group president, International, made the decision to retire effective June 30.

In November 2021, ELC announced the retirement of Chris Good, group president, North America.

Also in November, ELC announced they had joined numerous consumer product companies in partnering with Pulpex, creator of a first-of-its-kind renewable pulp bottle technology—becoming the consortium’s first prestige beauty company to support the development of a recyclable paper bottle made from responsibly sourced pulp. The ELC team said it is looking into scaling the Pulpex paper bottling technology across its brand portfolio.

In February 2022, ELC made a minority investment in microbiome-friendly skincare brand Haeckels.

In an industry-shaking move, in February, ELC fired executive group president John Demsey—who had played a monumental role at the company for 31 years—after he posted an offensive meme on his personal Instagram account that included a racial slur and a Covid-19 joke.

In March, in honor of National Youth HIV/AIDS Awareness Day on April 10, M·A·C Cosmetics created its first-ever NFT collection featuring the work of the late iconic artist and activist, Keith Haring. One-hundred percent of the purchase price from primary sales of the VIVA GLAM x Keith Haring NFT collection was donated to the M·A·C VIVA GLAM Fund to support youth impacted by HIV/AIDS.

In May, ELC suspended all commercial activity in Russia and Ukraine, and sales in those regions reportedly declined.

Also in May, the company announced that Jerrod Blandino and Jeremy Johnson, the co-founders of Too Faced Cosmetics, were departing the brand after 24 years “to embark on new entrepreneurial projects and endeavors,” effective June 30, 2022. Tara Simon was promoted to the role of global brand president, Too Faced.

In July, Estée Lauder partnered with the International Space Station. Two projects were selected by ISS National Lab’s team of scientists to receive funding (up to $1M total) from exclusive challenge partner Estée Lauder, with the intent of exploring environmentally responsible plastics alternatives aboard the space-based lab. As the exclusive partner of the challenge, Estée Lauder “has set out to champion the next generation of leaders in science to help drive sustainable packaging within the beauty industry and beyond.”

In August, ELC surprised the beauty industry when rumors flew about them potentially purchasing luxury brand Tom Ford, which encompasses beauty, fragrance, apparel, eyewear and accessories. They already hold a highly successful licensing deal for Tom Ford Beauty. At the time, The Wall Street Journal said that the potential $3 billion deal would be Estée Lauder’s biggest acquisition ever, but added that the beauty company is not the only party interested in snapping up Tom Ford. Next, rumors swirled about ELC being in discussions with French luxury fashion house Balmain, to create a beauty brand. The Balmain label currently includes luxe haircare products and accessories.

Looking Ahead:

Will Lauder have as successful of a year in 2023 as they did in 2022? Stay tuned. Reported net sales are currently forecasted to increase between 3% and 5% versus the prior-year period.

Commenting on the upcoming year, Freda said, “We are very confident in the strength of our company and in the vibrant long-term growth opportunity of prestige beauty, but recognize the environment remains complex and uncertain at this point in time. For fiscal 2023, we expect to deliver strong organic sales growth, fueled by our diversified growth engines and enticing innovation, and to take the opportunity in this volatile year to continue investing for our exciting future.”

Beauty Sales: $16 billion

Major Products: More than 25 prestige skin care, makeup, fragrance and hair care brands sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, M·A·C, La Mer, Bobbi Brown, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, Tom Ford Beauty, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frédéric Malle, Glamglow, Kilian Paris, Too Faced, Dr.Jart+, DECIEM (including The Ordinary and NIOD)

New Products: Estée Lauder Beautiful Magnolia fragrance, Estée Lauder Advanced Night Repair Intense Reset Concentrate and Perfectionist Rapid Brightening Treatment Serum, La Mer Eye Concentrate, La Mer The Regenerating Serum, Clinique Even Better Clinical Dark Spot Corrector and Interrupter, Jo Malone London Poppy & Barley, Tom Ford Metallique, Aveda Nutriplenish line, Smashbox Halo Plumping Dew, MAC Cosmetics X Harris Reed

Comments: Even with global travel at a relative standstill and department and freestanding store retail mostly shut down as a result of Covid-19, the prestige beauty powerhouse, which turns 75 years old this year!—The Estée Lauder Companies (ELC)—reported net sales of $16.22 billion for its fiscal year ended June 30, 2021, an impressive increase of 13% from $14.29 billion in the prior-year period. The company’s edge on technology and a focus on e-commerce led to robust online sales which made up for soft brick-and-mortar results—and boosted ELC’s bottom line. Online net sales showed strong double-digit growth for fiscal 2020, as well as growth in all product categories and from nearly every brand.

Net sales grew in every region and in most product categories, as a gradual reopening of brick and mortar and travel began. Incremental net sales from ELC’s acquisition of Have&Be Co. Ltd. (Dr. Jart+) and the increase in its ownership of Deciem Beauty Group contributed 2 percentage points of growth to reported net sales.

Commenting on the year’s results, Fabrizio Freda, president and chief executive officer said, “We delivered outstanding results in fiscal 2021, capped by an exceptional fourth quarter and powered by our multiple engines of growth strategy as well as the timeless desirability of prestige beauty. Notably, both sales and profitability meaningfully exceeded fiscal 2019 performance. Amid the challenges of the pandemic, we invested in near- and long-term growth opportunities and managed costs elsewhere with discipline, while making important progress on our social impact commitments and sustainability goals.

“Our growth engines of Skin Care, luxury and artisanal Fragrance, Asia/Pacific, travel retail in Asia/Pacific, and global Online performed exceptionally well. Innovation soared and eight of our brands grew sales double-digits, led by Estée Lauder, La Mer and Jo Malone London. We amplified the strength of our skin care portfolio as we became majority owners of DECIEM, with its coveted brand The Ordinary. We also invested in an innovation center in Shanghai and a manufacturing facility near Tokyo to enhance our rapid growth in the region.”

Skin Care Net Sales

Skin Care net sales increased in every region in fiscal 2021, reaching $9.5 billion—and led by Estée Lauder, La Mer and Clinique. Incremental net sales of Dr. Jart+ and the increase in ownership of DECIEM contributed approximately 4 percentage points to growth.

Estée Lauder delivered double-digit growth, with strong results in mainland China. The brand also delivered double-digit growth in travel retail and online, driven by hero franchises, including Advanced Night Repair, Nutritious, Micro Essence, Revitalizing Supreme+ and Re-Nutriv, in part due to new product launches of Advanced Night Repair Synchronized Multi-Recovery Complex and Revitalizing Supreme+ Bright.

Strong double-digit growth from La Mer was attributed to Chinese consumers in both mainland China and travel retail. Online sales also grew double digits globally. Net sales growth was driven by increases in hero products, including The Treatment Lotion, Crème de la Mer, The Concentrate and The Moisturizing Soft Cream.

Clinique delivered double-digit growth in every region driven by strong demand for its hero products, including the Dramatically Different products and Even Better Clinical Radical Dark Spot Corrector + Interrupter.

Makeup Net Sales

Makeup net sales decreased to $4.2 billion, with losses from nearly all brands, led by M·A·C and Clinique. These declines were partially offset by growth at Too Faced and La Mer. However, makeup sales rose in the second half of the fiscal year in every region, reflecting the more advanced recovery in China.

Fragrance Net Sales

A trend toward luxury fragrance continued, with Fragrance net sales rising to $1.9 billion, thanks especially to increases from Jo Malone London, Tom Ford Beauty, Le Labo, Kilian Paris and Editions de Parfums Frédéric Malle.

Jo Malone London’s net sales grew double digits primarily driven by strength in colognes, including the new Blossoms Collection. Bath & Body and Home also delivered strong growth reflecting consumer demand for home fragrance products during the pandemic.

Tom Ford Beauty grew strong double-digits, highlighting the launches of Bitter Peach and Rose Prick Private Blend fragrances.

Hair Care Net Sales

Even with salons closed, Hair Care net sales were up, reaching $571 million, owing in particular to innovation at Aveda, including Botanical Repair. Aveda’s online sales grew strong double digits.

Net Sales by Region

Reported net sales in The Americas increased slightly to $3.8 billion (+1%), indicating a gradual comeback from retail closures. Online sales grew double digits in The Americas, accounting for 40% of sales, as the company utilized new and existing digital capabilities, which more than made up for declines from light traffic in brick-and mortar.

In North America, double-digit growth in the fragrance category and strong growth in skin care were mostly offset by the impact of the pandemic on the makeup category.

A 9% rise in net sales was recorded in Europe, the Middle East & Africa (EMEA) to reach $6.9 billion, led by travel retail and online orders. During the fourth quarter, rising vaccination rates allowed some markets to re-open. Net sales from the company’s global travel retail business increased year-over-year due mostly to growth in Asia/Pacific driven by China domestic travel, especially in Hainan, and Korea, which offset other losses in the region. Online sales rose strong double-digits, reflecting ELC’s increased focus on reaching consumers digitally.

Net sales in Asia/Pacific—particularly in mainland China, Korea, Australia and several smaller markets—showed the strongest percentage of growth, up 22% to $5.5 billion. Dr. Jart+ and the increase in ownership of DECIEM contributed approximately 6 percentage points to net sales growth.

Skin care, fragrance and hair care net sales grew strong double-digits in the region, while makeup net sales declined slightly.

ELC continued to invest in digital marketing, which drove strong double-digit online sales growth. Sales of the company’s products online represented 36% of sales for the fiscal year. Department stores, specialty multi and freestanding stores grew double digits as well.

In mainland China, net sales grew strong double digits led by continued strength in skin care, an uptick in fragrance growth and the trend toward recovery in makeup during the year. Nearly every brand grew, led by luxury brands, and sales increased double digits in every channel.

On August 20, 2020, ELC announced a two-year restructuring program, Post-COVID Business Acceleration Program, designed to resize their business against dramatic shifts in the wake of the Covid-19 pandemic. The Restructuring Program’s main areas of focus include accelerating the shift to online with the realignment of their distribution network reflecting freestanding store and certain department store closures, with a focus on North America and Europe, the Middle East & Africa; the reduction in brick-and-mortar point of sale employees and related support staff; and the redesign of the company’s regional branded marketing organizations, plus select opportunities in global brands and functions.

2021 Highlights

In February, Lauder paid $1 billion to increase its ownership in wildly popular, industry-disruptor, Canadian-based DECIEM to 76%, valuing the company at $2.2 billion. In three years, ELC plans to buy the rest of the company.

With industry growth in sales of skin care and a drop in color cosmetics, a day after announcing the DECIEM deal, ELC announced it would be closing Becca Cosmetics.

By 2025, ELC says 75-100% of its packaging will be recyclable, refillable, reusable, recycled or recoverable. Additionally, the company will increase the amount of post-consumer recycled material in its packaging by up to 50% in the same year.

In April, ELC announced it was shutting down operations for Rodin Olio Lusso.

In June, Clinique announced their new global brand ambassador, Melissa Barrera, a Mexican actress and singer and star of the film ‘In the Heights.’

Just last month, poet laureate extraordinaire Amanda Gorman was named Global Changemaker at Estée Lauder’s flagship brand—and will be featured in brand campaigns starting in 2022. She will also work with them on a corporate level to create Writing Change, helping to award $3 million in grants to promote literacy among girls and women — and access to equity and social change.

Looking Ahead

ELC plans to approve specific initiatives under the Restructuring Program through fiscal 2022 and expects to complete those initiatives through fiscal 2023, with savings of $400-$500 million, before taxes. They then plan to reinvest a portion in future growth initiatives.

When commenting on 2021 results, Freda emphasized, “We begin fiscal 2022 as a stronger company thanks to our employees, whose compassion, creativity, and resolve have been extraordinary during the pandemic. Our success in the past year gives us confidence for the new year, as volatility and variability from Covid-19 are likely to persist for some time to come. For fiscal 2022, we expect strong net sales and adjusted earnings per share growth with continued margin expansion. Our growth engines are poised to increasingly diversify as Makeup and Hair Care, developed markets in the West, and brick-and-mortar retail gradually recover and complement the strength of our existing growth engines. We anticipate that growth in emerging markets will also resume over time as the impacts of the pandemic abate.”

For first quarter fiscal 2022, reported net sales are forecasted to increase between 17% and 19% versus the prior year period.

For full year fiscal 2022, reported net sales are forecasted to increase between 13% and 16% versus the prior year period. This is ahead of the company’s long-term goal of 6% to 8% as the business begins to normalize as it recovers from the impacts of Covid-19.

Beauty Sales: $14.3 billion

Major Products/Brands:

• Aerin Beauty
• Aramis
• Aveda
• Becca
• Bobbi Brown
• Bumble and bumble
• Clinique
• Darphin
• DKNY
• Donna Karan
• Editions de Parfums Frederic Malle
• Ermenegildo Zegna
• Estée Lauder
• MAC
• Michael Kors
• Origins, Rodin
• Smashbox
• Tom Ford Beauty
• Tommy Hilfiger
• Too Faced
• Tory Burch
• Dr Jart+

New Products:

• MAC X Teyana Taylor
• Aveda Nutriplenish
• La Mer Luminous Lifting Cushion Foundation
• Estée Lauder Swiss Performing Extract
• Jo Malone London Vetiver & Golden Vanilla
• Smashbox Halo Healthy Glow Tinted Moisturizer
• Origins Green the Planet Collection
• Tom Ford Research Serum Concentrate

Comments: When The Estée Lauder Companies (ELC) released their fiscal results for the year ended June 2020, it was a somber disclosure for the world’s leader in prestige beauty, who has shown continuous growth year over year. While it retained its No. 3 position on our Top 20 list, net sales decreased by 4%. Still, a reported $14.3 billion in net sales (while below the prior year’s $14.7), with a large e-commerce share, is nothing to discount. The prestige beauty leader’s unprecedented rise in online sales due to Covid-19, counteracted a slump in brick-and-mortar retail, most of which closed in March in response to the virus.

Moving forward, ELC announced it would shrink its brick-and-mortar space and rev up its already strong e-commerce focus, as part of a two-year post-pandemic “Business Acceleration Program” based on fourth quarter earnings. The beauty giant will shutter up to 15% of their standalone stores globally, and cut about 3% of its global workforce, up to 2,000 positions (mostly point of sale employees and related support staff), and exit some department stores, all in hopes of saving $300-$400 million annually from the efforts.

Fabrizio Freda, president and chief executive officer said, “Fiscal 2020 was a year without parallel, as we delivered record sales and exceptionally strong adjusted EPS growth in our first half and navigated with agility through an unprecedented pandemic in our second half. The second half also marked a period of profound pain as tragic events in the United States highlighted the systemic racial injustice that has plagued our society for far too long.”

He added: “In this challenging year, our multiple engines of growth strategy proved highly effective. The Estée Lauder brand grew double-digits for the third consecutive year. Asia/Pacific was strong with organic sales growth in mainland China and several other markets driving prestige beauty share gains, our skin care category grew and was further boosted by the acquisition of Dr. Jart+, and our online channel surged. We quickly pivoted to capture consumption online during Covid-19 as retail stores around the world temporarily closed.”

Tracey Travis, executive vice president and CFO of Estée Lauder, said on a conference call with analysts, “The pandemic has rapidly accelerated macro trends in global prestige beauty that were expected over a longer time horizon. These trends include shifts in where consumers shop, what they value, why they purchase the company’s products, and how they engage with the company’s brands in an increasingly digital and omnichannel world.”

In fact, Travis noted that the online business in North America was up almost 70% in the quarter, and represented about 60% of the sales in that region. He said North America is also the target for the store closings, along with Europe.

Sales were strongest in Europe, the Middle East & Africa ($6.3 billion), followed by Asia/Pacific ($4.3 billion) and The Americas ($3.8 billion).

However, in Europe, net sales declined in every market, led by the UK and the Western European markets, due to the effects from Covid-19 as the impact from retail door closures more than offset the 17% increase in net sales in the first half of the fiscal year. While gradual door re-openings began in mid-June 2020, foot traffic remained slow.

In The Americas, online net sales growth rose in March following the closure of brick-and-mortar in the region, and increased double-digits for the fiscal year. Online comprised 40% of sales in the region.

In Asia-Pacific, net sales growth—due to increases in China and Korea—increased 27% in the first half of the fiscal year before the outbreak of Covid-19 led to retail store closures at the end of January.

By category, skin care was the only category to advance, rising 13% over the prior year to $7.4 billion. Makeup achieved $4.8 billion in sales, followed by Fragrance ($1.6 billion) and Hair Care ($515 million).

Skin care net sales grew across most regions, led by Estée Lauder and La Mer. The category increased 26% in the first half of the fiscal year and was the most resilient category globally during the pandemic. Estée Lauder delivered strong double-digit growth, reflecting growth in Asia/Pacific, with significant strength in mainland China, as well as double-digit growth in travel retail and triple-digit growth online, driven by consumer demand for “high loyalty” hero franchises, including Advanced Night Repair, Perfectionist, Re-Nutriv, Micro Essence and Revitalizing Supreme+. Double-digit growth from La Mer was also driven by Asia/Pacific.

Net sales declined in makeup for all brands except La Mer and By Kilian. The Luminous Lifting Cushion Foundation was a winner from La Mer.

Net sales of fragrance decreased, primarily due to declines from designer fragrances, Estée Lauder and Jo Malone London due to the impacts of Covid-19. Net sales also declined due to the expiration of the Tory Burch license agreement in December 2019. However, double-digit net sales growth in Asia/Pacific was driven by ELC’s luxury and artisanal fragrances. Net sales from Le Labo rose mid-single digits with growth in nearly all regions and strong double-digit growth in Asia/Pacific and travel.

Hair care net sales declined at both Aveda and Bumble and bumble due to the impacts of Covid-19.

In November 2019, in their first acquisition of an Asia-based beauty brand, ELC announced full ownership of Have & Be Co. Ltd., the Seoul-based, global skin care company behind Dr. Jart+ and men’s grooming brand Do The Right Thing.

2020 Highlights

In February, prior to the unimagined impact of Covid-19, ELC reported favorable financial results for its second quarter. Net sales of $4.6 billion increased 15% from $4.01 billion in the prior-year period.

Early on, ELC began contributing to Covid-19 relief efforts by producing hand sanitizer in their U.S., UK and Belgium manufacturing facilities for high-need groups and populations, including front-line medical staff. The also funded the establishment of The NYC Covid-19 Response & Impact Fund.

In March, the beauty behemoth announced it was donating more than $2 million to relief efforts, through a $2 million grant to Doctors Without Borders, to support the organization’s work in response to coronavirus in under-resourced and highly impacted countries.

They also made a grant to support the establishment of the $75 million NYC Covid-19 Response & Impact Fund, administered by the New York Community Trust, to support New York City-based social services and cultural organizations that were affected by the public health crisis.

Lots of promotions and leadership changes were announced mid-year including notably, Jane Lauder, granddaughter of the company’s namesake founder and daughter of Ronald Lauder, as executive vice president, chief data officer of The Estée Lauder Cos.; and Jane Hertzmark Hudis to executive group president.

During the second half of fiscal 2020, online sales growth accelerated in every region as the company and its retailers activated numerous digital capabilities and strategies to capture consumer demand online. Net sales in mainland China, where restrictions were lifted first, grew strong double digits year-over-year during the fourth quarter of fiscal 2020, and net sales in Korea, excluding the impact of Dr. Jart+, also returned to growth in the quarter.

Covid-19 and its wide-ranging impacts have also influenced consumer preferences and practices due to the closures of offices, retail stores and other businesses and the significant decline in social gatherings. The demand for skin care and hair care products has been more resilient than the demand for makeup and fragrance. Within skin care, the demand for products in hero franchises has remained strong, driving double-digit growth at the Estée Lauder brand during the fourth quarter of fiscal 2020.

Looking Ahead

Freda emphasized, “In this new fiscal year, we remain focused on the safety and well-being of our employees and consumers. Our sense of urgency to act on our recently announced racial equity commitments is strong. We enter fiscal 2021 with cautious optimism, given the vibrancy of our skin care portfolio, acceleration in Asia/Pacific, momentum online globally, and robust innovation pipeline, which includes the exciting launch this month of Estée Lauder’s new Advanced Night Repair. We expect sales trends to improve sequentially each quarter.

“Our strategic priorities for fiscal 2021 rightly balance investment in these engines with cost discipline amid the ongoing pandemic. Through the Post-Covid Business Acceleration Program, we are better aligning our brick-and-mortar footprint to improve productivity and invest for growth. We are well-positioned to drive growth as the market dynamics support it, yet remain equally mindful of the effects of Covid-19 on consumers, the retail sector and economics, in general, as well as geopolitical uncertainty.”

According to Freda, the company continues to believe that consumer demand for its prestige products will remain strong despite ongoing challenges related to Covid-19. But due to all the uncertainties at present, the company is not providing any specific sales guidance for FY 2021.

Beauty Sales: $14.9 billion

Major Products/Brands:

• Estée Lauder, Aramis, Clinique
• Prescriptives, Lab Series, Origins
• Tommy Hilfiger, M•A•C, Kiton
• La Mer, Bobbi Brown, Donna Karan New York
• DKNY, Aveda, Jo Malone London
• Bumble and bumble, Michael Kors, Darphin
• Tom Ford, Smashbox, Ermenegildo Zegna
• AERIN, Tory Burch, RODIN olio lusso
• Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW
• By Kilian, BECCA, Too Faced

New Products:

• Estée Lauder Advanced Night Repair Eye Supercharged Complex
• La Mer Luminous Lifting Cushion Foundation
• MAC Love Me Lipstick Collection
• Tom Ford Skin Revitalizing Concentrate
• Tom Ford Research Serum Concentrate
• Tom Ford Métallique fragrance

Comments: Prestige Beauty continues to reign worldwide and The Estée Lauder Companies continues to profit. Net sales of $14.9 billion in 2018 increased 9% from the previous year’s $13.68 billion, with growth in international business and nearly all product categories. Net earnings rose to $1.79 billion from $1.11 billion in 2018. Net sales were strongest in the Europe, Middle East, Africa region, reaching $6.5 billion; followed by The Americas, with $4.7 billion; and Asia/Pacific with $3.7 billion. Net earnings rose to $1.79 billion from $1.11 billion last year.

Commenting on the results, Fabrizio Freda, president and chief executive officer, said: “Fiscal 2019 was an outstanding year for our company. We achieved strong net sales gains across our business, fueled by investments in our strategic priorities, including improved data analytics that helped power our innovation and digital marketing.”

He added: “With savings from our Leading Beauty Forward initiative and cost discipline throughout the organization, we grew profit far ahead of our net sales growth, while also investing in our strategic priorities.”

Freda attributed strong growth to the Asia/Pacific region (which grew double digits); skincare, in every region; the travel retail and online channels globally; and “compelling innovations and high-quality products, which drove strong repeat purchases.”

Globally, both large, mid-sized and small brands experienced good results.

By product category, Skincare led with $6.6 billion, followed by Makeup with $5.9 billion.

Skincare net sales grew across most regions, led by Estée Lauder and La Mer. The Estée Lauder brand delivered double-digit net sales growth in all regions and nearly all channels of distribution.

The bulk of the increase was seen in key franchises, including Advanced Night Repair, Perfectionist, Nutritious, Micro Essence and Revitalizing Supreme. La Mer attracted a double-digit leap.

In Makeup, sales growth was attributed to Estée Lauder, MAC, Tom Ford Beauty and La Mer. Too Faced was also a contributor. These increases were partially offset by lower net sales from Clinique and Smashbox. MAC, Tom Ford Beauty and La Mer all achieved double-digit growth.

Luxury fragrance got a boost from Jo Malone London and the brand’s expanded targeted consumer reach in Asia/Pacific.

Aveda accounted for higher hair care net sales, especially with online sales of collections including Cherry Almond Softening Shampoo and Conditioner and the Rosemary Mint and Shampure product lines.

Freda explained, “Importantly, this year’s results cap a remarkable decade of strategic and operating achievements. Since launching our current strategy in 2009, we have diversified and strengthened our company, creating a solid foundation to continue our growth. “We ended the year with a strong fourth quarter, driven largely by the same growth engines we had throughout the year. Additionally, we saw modest improvement in our U.S. business despite a tough retail environment.”

News of Note in 2019

In March, the company announced increased usage of post-consumer recycled material in its packaging, targeting a level of 50% by 2025. Additionally, it said that by that same time, goals are for about 75-100% of its packaging to be recyclable, reusable, recycled or recoverable.

In June, Freda was named to the prestigious Barron’s list of the World’s Best CEOs of 2019, specifically to the “growth leaders” category, for the second consecutive year.

All eyes are now on Tom Ford to become another billion-dollar producer for ELC, especially with the luxe brand’s foray into serious “scientific skincare,” developed in the fashion-and-beauty designer’s own labs.

Looking Ahead

The future looks bright, although somewhat uncertain, according to Freda, who says, “Prestige beauty continues to be one of the most desirable consumer sectors. As the best diversified pure play in the industry, we are uniquely positioned to capture global share. In fiscal 2020, we plan to continue to invest in the most compelling opportunities, including those in emerging markets beyond China. We expect another year of strong net sales growth, margin improvement and a double-digit increase in earnings per share.”

The company expects global prestige beauty to grow approximately 6-7% during the fiscal year, “assuming no additional geopolitical risk materializes.” However, the company says it is mindful of risks related to social, economic and political issues, including “geopolitical tensions, regulatory matters, global security issues, currency volatility and economic challenges that could affect consumer spending in certain countries and travel corridors.” Noted risks include: continued softness of brick & mortar retail in the U.S. and UK, especially in the makeup category; costs associated with the anticipated Brexit in the UK; escalation of trade tensions and tariffs between the U.S. and China; and protests in key shopping areas in Hong Kong.

Beauty Sales: $13.7 billion (FY 2017: $11.8 billion)

Major Products/Brands: Prestige skincare, makeup, fragrance and hair care products sold in more than 150 countries and territories.

Brands include:

• Estée Lauder, Aramis, Clinique,
• Prescriptives, Lab Series, Origins,
• Tommy Hilfiger, MAC, Kiton, La Mer,
• Bobbi Brown, Donna Karan New York, DKNY,
• Aveda, Jo Malone London, Bumble and bumble,
• Michael Kors, Darphin, Tom Ford, Smashbox,
• Ermenegildo Zegna, Aerin, Tory Burch, Rodin olio lusso,
• Le Labo, Editions de Parfums Frédéric Malle,
• GlamGlow, By Kilian, Becca and Too Faced

New Products:

• Estée Lauder New Advanced Night Repair Eye Supercharged Complex
• Estée Lauder Repair + Renew For Firmer
• Radiant-Looking Skin
• Too Faced Better Than Birthday Sex Mascara
• Tom Ford Satin Matte Lip Color
• Becca Skin Love Weightless Blur Foundation
• Clinique Dramatically Different Hydrating Jelly
• Aerin Rose de Grasse fragrance
• Tom Ford Fougère d’Argent Parfum
• Aveda Cherry Almond Shampoo and Conditioner

Sales Climb, As ELC Is Stronger Than Ever

The Estée Lauder Companies Inc. (ELC) reported even stronger than expected 2018 financial results for its fourth quarter and fiscal year ended June 30, 2018—achieving net sales of $13.68 billion, a 16% increase compared with $11.82 billion in the prior year. The fourth quarter of fiscal 2018 results  marked the 16th straight quarter of improved earnings.

Fabrizio Freda, president and chief executive officer, said, “Fiscal 2018 was an outstanding year for our company. We generated higher sales in every region and product category and gained global share. By investing in our hero franchises, fast-growing channels and digital and social media, we delivered double-digit sales and adjusted earnings per share growth. We achieved record net sales in fiscal 2018 and one of our best performances in the last decade.”

Freda went on to say: “Sales climbed in virtually all our brands and we hit milestones along the way. Among the top four brands, our flagship Estée Lauder brand achieved record global sales and grew 22% in constant currency, demonstrating the amazing equity of the brand.” La Mer became the fourth brand in the company’s portfolio to contribute well over $1 billion in net sales; sales also increased globally at MAC and Clinique.

Due to corporate efforts laid out in May 2016, via its Leading Beauty Forward initiative to build on its strengths and better leverage its cost structure, the beauty giant targeted its investments to shifts in consumer and market dynamics across product categories, geographic regions, brands and distribution channels. ELC said the strategies taken positioned it well for the resurgence in global prestige skin care growth as well as the strong increase in demand among Chinese consumers.

Net sales increased in several developed and emerging markets, and reflected strong growth from the travel retail, online and specialty-multi channels. Skin care net sales benefited from increases at Estée Lauder, La Mer, Origins and Clinique. Makeup net sales growth was driven by increases from Estée Lauder, Tom Ford and M.A.C, as well as both incremental and higher comparable net sales from the company’s 2017 acquisitions of Too Faced and Becca. Fragrance net sales growth reflected increases from Jo Malone London, Tom Ford, Le Labo and By Kilian. Hair care net sales increased, reflecting growth from Aveda.
Makeup sales were up 11% to $5.6 billion for the year, largely due to Estée Lauder, Tom Ford, Becca and La Mer, and Too Faced Cosmetics. Too Faced sales were up 22% for the fourth quarter.

2018 Highlights

In February, MAC Cosmetics announced that industry veteran Karen Buglisi Weiler would be stepping down as MAC’s global brand president after 20 years and Philippe Pinatel would follow as her successor.

In May, ELC’s Fabrizio Freda was named to the first-ever CEO RepTrak study, as one of the world’s most reputable CEOs. The global study shows what drives CEO reputation, the direct correlation between corporate reputation and stakeholder support.

For the fourth quarter, in August, ELC reported a hefty jump in sales, especially in high-end skincare in travel retail and elsewhere, and announced that La Mer had become a billion-dollar brand.

Also in August, Estée Lauder introduced its new Advanced Night Repair Eye Supercharged Complex, with “the power to help repair the visible impact of lack of sleep, UV, pollution and even blue light dramatically.”

Looking Ahead

According to ELC, global prestige beauty is continuing to perform exceptionally well in fiscal 2019 and is estimated to grow 5% to 6% during the fiscal year. ELC expects to grow ahead of the industry.

“In fiscal 2019, Freda said, “we will continue to create products that appeal to a more diverse and growing middle class around the world and we are confident that we can continue to achieve industry-leading sales and double-digit earnings per share growth.

With a successful strategy that focuses on multiple engines of growth across products, geographies, channels and demographics, we expect to once again gain share globally in fiscal 2019.”

Beauty Sales: $11.8 billion

Major Products/Brands: Prestige skincare, makeup, fragrance and hair care products sold in more than 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, M•A•C, Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Victoria Beckham Estée Lauder, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, AERIN, Tory Burch, Rodin olio lusso, Le Labo, Editions de Parfums Frédéric Malle, GlamGlow, By Kilian, Becca and Too Faced.

New Products: Clinique Pep-Start, Clinique Fresh Pressed, Estée Lauder Double Wear Nude Cushion Stick Radiant Makeup, Estée Lauder New Dimension Shape + Fill Expert Serum, Too Faced Glitter Like You Mean It, M•A•C Personality Palettes/Power Hungry, Bobbi Brown Remedies Skin Wrinkle Treatment No 25- Smoothing, Plumping & Repair, Editions de Parfums Frédéric Malle Outrageous Special Edition, Tom Ford Soleil Color Collection.

Comments: Much of this year’s increased revenues among our Top 20, came from Asia and developing markets and e-commerce—and nowhere is this truer than with The Estée Lauder Companies (ELC), which specializes in the Prestige market. The cosmetics industry powerhouse announced annual revenues of $11.8 billion for the fiscal year ending in June, an increase of 5% over 2016. (Excluding the impact of foreign currency translation, net sales increased 7%.) Sales of beauty products online were up 33% across the board, with the makeup category alone showing 7% growth to $5 billion.

Gains were all linked to the success of global e-commerce, especially in China, where all of the company’s 29 brands posted double-digit growth in online sales. Overall results include an impactful sales growth of 40% in China with e-commerce sales increasing by 50%. Online sales accounted for 20% of total company sales. China is ELC’s third largest online market, behind the U.S. and the U.K.

ELC’s 2016 Millennial-targeted purchases of Becca, known for its focus on complexion products for a wide range of skin tones, for $200 million in October 2016—and of the popular, cult brand, Too Faced, for approximately $1.45 billion in December—the company’s largest brand acquisition ever—have succeeded in boosting ELC’s bottom line.

In December, after 25 years with ELC, makeup artist Bobbi Brown left her namesake cosmetics brand.

By Category

Makeup led the ELC categories, accounting for $5 billion for the year. Skin Care reached $4.5 billion; Fragrance followed with $1.6 billion; Hair Care $539 million; and Other, $69 million.

Makeup sales increased, driven in large part by the fiscal 2017 acquisitions of Too Faced and Becca, with double-digit increases from Tom Ford, Smashbox, La Mer and Estée Lauder. Tom Ford Soleil Color Collection, La Mer’s SkinColor Collection and Estée Lauder’s Double Wear and Pure Color product lines all performed well. Sales of Clinique and M•A•C makeup in the U.S. declined slightly, due to slow foot traffic in some U.S. brick-and-mortar stores.

Strong double-digit gains from La Mer boosted net sales for Skincare. The Estée Lauder brand delivered solid sales growth, primarily in travel retail and China, due, in part, to Advanced Night Repair and Revitalizing Supreme. GlamGlow also showed good results, as did Bobbi Brown, Origins and Aveda. These increases were partially offset by lower  skin      care sales from Clinique.

In Fragrance, net sales increased, primarily due to strong double-digit gains from luxury brands Jo Malone London, Tom Ford and Le Labo, and incremental sales from the recent acquisition of By Kilian.

Hair Care sales decreased slightly from the previous year.

By Geographic Region

Net sales and operating income for ELC’s geographic regions were described as “unfavorably impacted by the strength of the U.S. dollar in relation to most currencies.”
Sales in The Americas were the strongest at $4.8 billion. Europe, the Middle East & Africa reported sales of $4.6 billion; and Asia/Pacific, $2.4 billion.

Most markets in Europe, the Middle East & Africa recorded sales growth, with many posting double-digit increases, led by Russia, Italy, the Balkans, Israel and India. In travel retail, ELC reported “exceptionally strong double-digit sales growth” across most brands.

As for Asia/Pacific, all markets recorded growth, except Hong Kong, and led by strong double-digit growth in China, where higher sales reflected strong double-digit gains in most brands. Estée Lauder, La Mer and M•A•C were major contributors.

2017 News of Note

Looking to expand its customer base, in March, MAC Cosmetics announced it would enter both ulta.com and a selection of Ulta Beauty stores by June.

In April, after a 40-year career at The Estée Lauder Companies, Thia Breen, group president, North America, announced her retirement; Chris Good, president, UK and Ireland, was named her successor in the role of president, North America.

In May, the company announced that Dominique Conseil, global brand president, Aveda, would retire; he is succeeded by Barbara De Laere, who has been named SVP, global general manager, Aveda.

In June, Lauder discontinued the Estée Edit line, especially geared toward Millennials and self-selection, and instead invested in the Victoria Beckham range.

ELC announced investment plans that would double Beckham’s makeup collection for the fall season. Packaging for the second time around was updated. The black, fluted leather on the original compacts will be pebbled leather going forward, and the Eye Foils, once in black, opaque packaging, are now in clear glass pots with gold caps to make the product visible. A new Skin Perfecting Powder, $85, will come in a luxe, blonde-gold textured compact, fashioned from the same hardware as Beckham’s handbags. The Victoria Beckham Lit Beauty Box: Noir, a $1,500 light box with removable lighted mirror and eight products, will be joined by a Victoria Beckham Collection Trousse de Maquillage: Noir Makeup Kit, a $700 leather case with six products.

Also in June, ELC announced that it had invested in a Canadian-based beauty company, DECIEM, known as “a fast-growing, vertically integrated multi-brand company, with its own laboratory, manufacturing, e-commerce sites, retail stores and marketing infrastructure. The company has launched 10 brands to date, including “international cult skincare favorite “The Ordinary.”

Beauty Sales: $11.3 billion

Major Products/Brands: Skin care, makeup, fragrance and hair care products sold in more than 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, M•A•C, Kiton, La Mer, Bobbi Brown, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, Aerin, Tory Burch, Rodin olio lusso, Le Labo, Editions de Parfums Frédéric Malle, Glamglow and By Kilian.

New Products: La Mer Genaissance de La Mer The Serum Essence, Estée Lauder Double Wear, Estée Lauder Pure Color Envy, Estée Lauder Advanced Night Repair Intensive Recovery Ampoules, Clinique Beyond Perfecting foundation + concealer, Jo Malone Mimosa & Cardamom, Tom Ford Noir, Aveda Thickening Tonic, Estée Edit, Bobbi Brown Retouching Wand.

Comments: Over the past year or two, The Estée Lauder Companies (ELC) has been finding its place in the rapidly changing world of beauty, now challenged by indie brands, millennial consumers, tough prestige competition, lower department store traffic and global online sales. Strategies have included corporate restructuring, a multi-year plan and bringing on younger and intensely popular social media influencers such as Kendall Jenner and most recently, Victoria Beckham.

Focusing on makeup and revitalizing its fragrance holdings paid off. For the year, ELC announced that it had achieved net sales of $11.3 billion, up 4% over the prior year.

Fabrizio Freda, president and chief executive officer, said, “Our fiscal 2016 performance gives us much to celebrate. We again delivered strong constant currency net sales growth and double-digit adjusted constant currency EPS growth, reflecting the compelling products and services we bring to consumers around the world. We capitalized on shifting consumer preferences by leveraging our strength in makeup and positioning our company to win in luxury fragrances. We nimbly allocated resources and made strategic investments in areas that gave us terrific results, including emerging markets, our makeup category, and the online and specialty-multi retail channels. Importantly, we achieved these results against a backdrop of social and political instability, currency volatility and economic challenges.”

By Category

The company noted that sales in all categories and in all geographic regions were affected by the negative impact of a strong U.S. dollar in comparison to other currencies. But the company remains “in the right place at the right time,” with the prestige market seemingly stronger than ever, and with a positive outlook for the future.

For instance, while Skin Care net sales decreased, due to currency issues, double-digit gains were contributed by ultra-prestige brand La Mer, including new product introductions, such as Genaissance de La Mer The Serum Essence. The Origins brand brought increases in facial mask products. These brands offset lower skin care sales from Estée Lauder and Clinique, which may have been indicative of a general global slowdown in the category especially within the Asia/Pacific region, and particularly Hong Kong.

Makeup continued to be a corporate winner as the category generated net sales growth, due especially to double-digit increases from M•A•C, Smashbox and Tom Ford, as well as solid gains from Bobbi Brown. The Estée Lauder and Clinique brands also achieved good results. Clinique posted higher makeup sales, reflecting recent product offerings, such as Beyond Perfecting foundation + concealer.

According to ELC, its makeup category is growing in lipsticks and foundations, due to increased usage in geographic areas such as the UK and Asia.

Luxury fragrance brands Jo Malone London and Tom Ford contributed double-digit gains. Jo Malone Mimosa & Cardamom and Tom Ford Noir proved especially popular. Sales of these brands partially offset flagging sales of certain Estée Lauder, Clinique and designer fragrances.

Growth in hair care net sales were attributed to a few recent product launches, including Invati Men, Shampure dry shampoo and the Thickening Tonic by Aveda.

By Region

In North America, net sales increased, due to growth of a number of brands led by Tom Ford, Jo Malone and Smashbox, as well as La Mer, M•A•C and Bobbi Brown. Increased makeup sales were partially offset by lower skin care and fragrance sales. The Estée Lauder and Clinique brands each posted double-digit growth in makeup for the year. Sales in ELC’s online business grew strong double digits.

Sales in Canada and Latin America each increased single-digits. Growth in Latin America was led by Brazil and Mexico, primarily driven by M•A•C. Europe, the Middle East & Africa led the company’s growth for the year, with nearly all countries recording net sales growth, and with many posting double-digit increases. ELC estimates that it continued to outperform prestige beauty in most markets in the region. In travel retail, sales growth was generated on new launch initiatives, an increase in airline passengers, new consumers and new brand launches. Jo Malone, Tom Ford, M•A•C and Smashbox were major contributors.

In the Asia/Pacific region, sales in constant currency increased in every country, except Hong Kong, including double-digit growth in Australia, the Philippines and New Zealand. Higher sales in China reflected sales gains in most brands and increased online activity. In Hong Kong, the reduction in tourism from China continues to negatively impact business, particularly for the Estée Lauder, Clinique and La Mer brands.

News of Note in 2016

A major corporate restructuring began in November 2015. John Demsey was promoted to executive group president and Jane Hertzmark Hudis took over as group president when Lynne Greene announced her retirement. A couple of months later, Stephane de la Faverie was promoted to global brand president, Origins and Darphin. Beth DiNardo became global brand president, Smashbox. At the same time, Daniel Rachmanis was promoted to president, Latin America.

In February, ELC continued its play for niche, luxury fragrance brands, acquiring By Kilian, which boasts creative, innovative and refillable packaging, and is sold in freestanding retail locations, specialty stores and perfumeries in more than 40 countries.

In March, in a major attempt to reach out to Millennials—and with the aid of spokesmodel Kendall Jenner—Estée Lauder moved outside department store counters to launch its new makeup and skin care collection, Estée Edit, in Sephora.

Leadership changes continued in April. Peter Jueptner was  appointed president, Europe, the Middle East and Africa. Stephane de la Faverie became global brand president, Estée Lauder. Nancy Mahon took on the role of senior vice president, global corporate citizenship and sustainability. Maria Cristina González Noguera was appointed senior vice president, global public affairs.

The prestige global beauty giant announced a new deal for a limited-edition collection called Victoria Beckham Estée Lauder.

The former president of Beauté Prestige International USA at Shiseido, Patrice Béliard transitioned to ELC to run the Aramis and Designer Fragrances division.

At the beginning of May 2016, Lauder announced a major restructuring plan. The three-year plan includes job cuts of between 900 and 1,200 positions—reportedly about 2.5% of the firm’s employees. The company will also focus on its digital side and continue to develop its makeup categories.

In June, expansion plans were announced highlighting Tom Ford Beauty, and Lauder’s plan to make it into a global leader, aiming for billion-dollar brand status.

Following the announcement, Guillaume Jesel was promoted to global brand president for the brand.

Continuing changes in its leadership strategy, in August, Andrew Ross, former executive vice president and chief strategy officer at ConAgra Foods, Inc., was appointed to the role of senior vice president, strategy and new business development.

Looking Ahead

Going forward, Freda remains confident. He said, “In fiscal 2017, we will aggressively pursue new opportunities to enhance our leadership position. We will continue to diversify our distribution toward the fastest growing channels, while further developing our mid-sized brands and the newest additions to our portfolio. With our Leading Beauty Forward initiative, we are laying the foundation for future growth by lowering our cost base, increasing our agility and investing behind our strengths and improving our go-to-market capabilities.”

For the year ending in June 2017, the company expects sales to rise 6% to 7% over the previous year’s period, or roughly $12 billion, below the $12.8 billion average analyst estimate.

Beauty Sales: $10.8 billion

Major Products/Brands: Prestige cosmetics, skin care and fragrances, including Estée Lauder, Aerin, Bobbi Brown, La Mer, Tom Ford, MAC, Prescriptives, Jo Malone, Smashbox, Clinique, Origins, Glamglow, Ojon, Aramis, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, Coach, Ermeneglido Zeda, GoodSkin, Grassroots, Lab Series, Aveda, Bumble and Bumble, Darphin, Le Labo, Rodin Olio Lusso, GlamGlow.

New Products: Estée Lauder Double Wear, Estée Lauder Modern Muse Le Rouge, Aerin Rose de Grasse fragrance, Clinique Pretty Easy Liquid Eyelining Pen, MAC Haute Dogs Collection, GlamGlow SuperMud Clearing Treatment, Tom Ford Neroli Portofino.

Comments: As a company that specializes in skin care and makeup, The Estée Lauder Companies (ELC) has been undergoing a mini makeover of its own over the last year, striving to draw in larger numbers of millennial consumers, as it continues to successfully expand its key performers including MAC, Jo Malone, Aveda and Tom Ford.

The company’s year-end report—which showed a 2% drop, may have been somewhat attributed to a slack-off in interest in heritage brands Estée Lauder and Clinique, as well as currency fluctuations and other problems that plagued most of this year’s Top 20 Companies.

Still, for the fiscal year ended June 30, 2015, ELC achieved net sales of $10.78 billion, compared with $10.97 billion in the prior year. Net earnings for the year were $1.09 billion, compared with $1.20 billion last year. Excluding the impact of foreign currency translation, net sales increased 3%.

Upon releasing the year-end results, Fabrizio Freda, president and chief executive officer, said, “One of the great strengths of our company is our ability to successfully execute our well-defined strategy. This was clearly evident in fiscal 2015 as we once again delivered strong results despite considerable macroeconomic headwinds and challenges. For the full year, our adjusted 6% local currency sales growth met our expectations, and we exceeded our earnings per share forecast. These results speak to the strength of our underlying business across brands, product categories, geographies and channels.”

Freda said ELC sales grew at a faster rate than global prestige beauty, due to their “multiple engines of growth.” Double-digit sales gains were achieved in a large portion of makeup and luxury brands and in online, specialty-multi and freestanding store channels. Emerging markets, the UK and growth in certain developed markets were also key performance drivers.

News of Note

During the year, ELC worked at strengthening and diversifying its portfolio, which includes 25 brands sold in 150 countries, and acquired four prestige beauty brands—Le Labo, Rodin Olio Lusso, Editions de Parfums Frédéric Malle and GlamGlow. They also selected a couple of influential, young beauty icons as brand representatives.

In continuing efforts to “youthify” the Estée Lauder brand, ELC first signed Eva Mendes as the new face of Estée Lauder New Dimension Skincare. The collection launched at all Estée Lauder counters in July 2015.

Next, 19-year-old supermodel and it-girl-of-the-moment Kendall Jenner was tapped to represent the brand—mostly via the color red. First it was red lipstick; now Jenner is wearing a smoking hot red dress to help to launch Estée Lauder’s new perfume, Modern Muse Le Rouge. The flanker bottle and cap features a red bow on top with Le Rouge printed in a matching hue.

In May, global leader MAC, which sells four lipsticks a minute in Latin America (despite a slump in Brazil and Mexico), announced plans to operate more than 220 doors there by 2018 and grow 40% this year via an ambitious expansion.

In June, ELC appointed Guillaume Jesel to the position of senior vice president/global general manager, Tom Ford Beauty, which is about to launch in China. In this role, he leads the global beauty brand, working directly with Tom Ford, and reporting to John Demsey, group president, The Estée Lauder Companies.

Demsey commented: “Guillaume has already had a major impact on the brand, and we are confident that his leadership skills and his experience in the world of cosmetics will help this brand grow into a major powerhouse.”

Looking Ahead

With an eye on FY 2016, Freda, said ELC is well-positioned for continuing growth in the global prestige beauty marketplace. He explained, “In fiscal 2016, we expect constant currency net sales growth of 6% to 8% and double-digit earnings per share growth, after adjusting for the accelerated sales orders.”

Beauty Sales: $10.9 billion

Major Products: Prestige cosmetics, skin-care, hair care and fragrances sold under brands including Estée Lauder, Bobbi Brown, La Mer, Tom Ford, MAC, Prescriptives, Jo Malone, Smashbox, Clinique, Origins, Ojon, Aramis, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, Coach, Ermeneglido Zeda, GoodSkin, Grassroots, Lab Series, Aveda, Bumble and Bumble, Darphin.

New Products: Estée Lauder EE Cream, Estée Lauder Pure Color Envy Sculpting Lipstick, Clinique All About Shadow, Clinique Smart Custom-Repair Serum, Aveda Dry Remedy and Damage Remedy, Lorde color cosmetics mini-line.

Comments: Unlike its predecessors on this list of Top 20 companies that tend toward covering a range of products from mass to prestige, The Estée Lauder Companies (ELC) has always remained true to its position in the Prestige market—and the strategy has paid off, with increased sales year after year.

Thanks especially to ever-increasing sales in Travel Retail, Fiscal 2014 was once again a record year. Sales in this sector grew by double digits for the second year in a row, and overall net sales rose 8% to $10.97 billion.

Fabrizio Freda, president and CEO, announced, “Fiscal 2014 was another outstanding year for our company. We achieved record results across many metrics, including sales, operating margin, earnings per share and operating cash flow. Our topline growth was nearly double that of prestige beauty and was broad-based across regions, product categories and channels, despite slower industry growth in some key countries. Our emerging markets, makeup and luxury brands, and our online, freestanding store and travel retail channels led our growth. At the same time, we made careful investment choices to support the fastest areas of growth, while continuing to eliminate non-value-added costs. This excellent performance further demonstrates the resilience and consistency of our strategic business model and strengthened our leadership in global prestige beauty.”

By product category, Skincare led, with sales of $4.8 billion, followed by Makeup ($4.2 billion); Fragrance ($1.4 billion); Hair Care ($516 million); and other ($48 million).

Skincare remains a top priority at ELC, as it continues to gain market share in countries throughout the world. This year’s sales were boosted by recent launches of Estée Lauder brand products Advanced Night Repair Synchronized Recovery Complex II and Micro Essence Skin Activating Treatment Lotion, as well as increased sales from its Nutritious line of products. Dramatically Different Moisturizing Lotion+ and Even Better Essence Lotion, from Clinique also contributed to sales growth, as did higher sales from the company’s luxury skin care brand, La Mer.

Makeup artist brands, MAC in particular, led the way in the color cosmetics category. Estée Lauder’s Pure Color Envy Sculpting Lipstick and Clinique’s All About Shadow were also top sellers. Double-digit sales increases from Smashbox and the Tom Ford line of cosmetics also contributed to the category’s growth.

Once again, ELC’s positioning in the luxury market paid off in the Fragrance category, with reported strong double-digit sales growth from luxury brands Tom Ford and Jo Malone. Recent launches of Estée Lauder Modern Muse, the Michael Kors Collection and Tory Burch also proved profitable.

Hair care may be ELC’s smallest category, but it still prospered, with net sales growth of 5%, driven mostly by Aveda, which reflected solid gains in the travel and salon channels, along with rising sales of its successful Invati line of products and the Dry Remedy and Damage Remedy franchises. Sales also increased at Bumble and bumble.

Geographically Speaking

Sales increased by 6% throughout The Americas region to reach nearly $4.6 billion. In the U.S., net sales rose due to growth from ELC’s makeup artist and luxury brands and certain heritage and designer fragrance brands, which introduced new products. The continued expansion of Smashbox as well as some of ELC’s hair care brands also helped to grow sales. Online sales grew double digits.

In the Europe, Middle East & Africa region, net sales increased 11% to nearly $4.2 billion. Gains were recorded in each product category and in most countries, and ELC reports that it continued to outperform prestige beauty in many of these markets. Sales were up double-digits in the UK as well as emerging markets, such as Turkey and Central Europe. While gains were reported in Germany and France, “soft retail environments” were noted in certain other European countries.

As mentioned earlier, travel retail shone, with sales increasing double digits. Reasons cited include higher sales from ELC’s new launches, an increase in global airline passenger traffic and expanded distribution, as well as accelerated retailer orders.

ELC reported a 5% net sales increase, reaching $2.2 billion, in Asia/Pacific, with growth in every country except Korea.

A Major Reorganization

In June, The Estée Lauder Companies announced a major corporate reorganization, centered on the Men’s Skincare market. The new men’s skincare category at Lauder consists of Lab Series and Clinique for Men. Lab Series was formerly part of the Aramis and designer fragrance division, while Clinique for Men was sold alongside other Clinique products, and mostly marketed to women who were purchasing their own Clinque products.

 At the same time, its designer fragrances division was also realigned.

Looking Ahead

In fiscal 2015, the company estimates global prestige beauty will grow approximately 3-4%. Once again, ELC expects to grow ahead of the industry by bringing highly innovative products to market and focusing on the fastest growing countries, product categories and channels.

Travel Retail sales—in particular those by Chinese travelers—are expected to remain a major component of ELC’s future revenue, but Freda has recently spoken about a change in Chinese travelers’ habits, with their destinations altering. He said travel to Southeast Asia, including Thailand and Malaysia, has decreased, while Chinese travel to South Korea and Japan has increased. With currency fluctuations and advance retail orders, etc., he said it’s a tough and constantly in-flux channel to strategize around—especially when it’s growing at a slower pace than in the past.

Beauty Sales: $10.2 billion

Michael Kors has expanded into beauty with ELC. The new collection features color cosmetics, body and sun care, and three new fragrances.

Major Products: Prestige skin care, makeup, fragrance and hair care products sold under brand names including Estée Lauder, Aramis, Clinique, Prescriptives, Lab Skincare for Men, Origins, Tommy Hilfiger, MAC, Kiton, La Mer, Bobbi Brown, Donna Karan, Aveda, Jo Malone, Bumble and bumble, Michael Kors, Darphin, American Beauty, Flirt!, GoodSkin Labs, Grassroots Research Labs, Sean John, Missoni, Tom Ford, Coach, Ojon, Smashbox, Ermenegildo Zegna.

New Products: Estée Lauder Modern Muse, Clinique Chubby Stick Intense, Clinique Even Better Eyes Dark Circle Corrector, Aveda Pure Abundance Style Prep, DKNY Be Delicious So Intense, Tommy Hilfiger Freedom Men, Coach Love, Ermenegildo Zegna Uomo; reformulated versions of Clinique Dramatically Different Moisturizing Lotion and Estée Lauder Advanced Night Repair; La Mer Moisturizing Soft Cream, MAC Matchmaster Foundation, Bobbi Brown Bobbi & Katie Collection.

Comments: Fabrizio Freda, president and chief executive officer of The Estée Lauder Companies (ELC) continues to steer the global beauty powerhouse on a highly profitable course, making major gains in key markets. Full year net sales increased 5% to a record $10.2 billion.

In delivering the fiscal year-end results, Freda said, “We concluded another outstanding fiscal year with a strong fourth quarter that saw high-single-digit sales gains and exceptional double-digit earnings per share growth. Fiscal 2013 marked another record year in which our company achieved a number of historic milestones: $10 billion in net sales, 15.2% operating margin and $1 billion in net earnings. We also delivered record earnings per share and operating cash flow.”

Freda also said that sales growth was greater than that for global prestige beauty, and that the company had achieved strong across-the-board sales gains in each of its geographic regions and major product categories.

Sales growth was particularly strong in luxury brands, online and travel retail channels and overall in emerging markets, along with solid gains in several developed countries. Travel retail sales exceeded $1 billion for the first time. As planned, the company increased global advertising spending versus the prior year to build momentum and gain share in its key markets and product categories—and also in hopes of drawing mass consumers into the prestige market.

By product category, Skin Care sales topped the chart at $4.5 billion, up about 6% over the previous year. Makeup followed with a 5% gain, at nearly $3.9 billion. Fragrance rang in at $1.3 billion (up 3%); Hair Care sales registered $489 million (up 6%); Other accounted for $41 million.

Skin care remained a strategic priority for ELC, and the company gained share in several countries where its products are sold. Sales gains were partially attributed to launches of Perfectionist CP+R, Advanced Time Zone, Advanced Night Repair Eye Serum Infusion and the Optimizer line of products from Estée Lauder. Recent successful product introductions such as The Moisturizing Soft Cream from La Mer and Even Better Eyes Dark Circle Corrector from Clinique also contributed to sales growth.

New product introductions, such as High Impact Extreme Volume Mascara and Chubby Stick Intense from Clinique and Pure Color Vivid Shine Lipstick from Estée Lauder, as well as increased sales of the Tom Ford line of cosmetics contributed to the category’s growth. MAC proved to be an especially good performer.

In fragrance, sales increases were generated from the recent launches of Zegna Uomo, DKNY Be Delicious So Intense, Tommy Hilfiger Freedom Men and Coach Love. Higher fragrance sales were also generated from luxury brands Jo Malone and Tom Ford.

Demand for natural hair care products was driven by Aveda, in part due to the continued success of its Invati line of products and the recent launches of Pure Abundance Style Prep and Be Curly Curl Controller. The category also benefited from expanded global distribution.

In terms of geographical areas, while Asia-Pacific is the company’s fastest growing region—with much attention centered on China—Brazil and Turkey are also among the company’s strongest emerging markets. Activity is also picking up across the Middle East and Africa.

The Americas—and primarily the U.S.— led with net sales of $4.3 billion (up 5% over the prior year). The Europe, Middle East & Africa segment followed, with net sales of $3.8 billion (+4%). The Asia/Pacific region generated $2.1 billion, an increase of 5%.

The net sales increase in The Americas reflects growth from most of Lauder’s brands, particularly its makeup artist and heritage brands. The increase was primarily attributable to growth in the U.S., while double-digit sales growth was recorded in Latin America. Net sales in Canada also increased.

Sales to department and specialty-multi stores were solid, and the company’s online business grew double-digits.

Net sales increased in the majority of countries in the Europe, Middle East & Africa region. Economic difficulties in certain Southern European countries impacted beauty consumption, but ELC continued to outperform prestige beauty in many markets. The net sales increase was led by high-single-digit growth in the company’s travel retail business and the UK, and double-digit growth in the Middle East.

Net sales in the travel channel grew double-digits at retail, which was more than triple the increase in airline passenger traffic. Sales gains in the UK and the Middle East each benefited, in part, from strength in the company’s makeup artist brands.

Double-digit net sales growth was also recorded in a number of areas, including South Africa, the Nordic countries and Turkey. These increases were partially offset by lower net sales, primarily in Russia, Spain and the Balkans.

Osiao is ELC’s first skin care line developed specifically for the Asian market.

In the Asia/Pacific region, the strongest local currency double-digit sales growth was generated in China, Hong Kong and Thailand, primarily reflecting strong sales of skin care products. Results in China included sales to new consumers in expanded distribution in tier two and three cities. Sales at retail also continued to grow strong double-digits. Lower sales were experienced primarily in Korea reflecting difficult economic conditions and competitive pressures.

A favorite notebook inspired the Bobbi Brown and Katie Holmes new purse-sized palette for eyes, cheeks and lips.

In September 2012, ELC launched Osiao, the company’s new luxury brand that debuted in China. The brand was developed by ELC’s Beauty Bank division, which is based in New York City, in partnership with the company’s research and development teams at the Shanghai Asia Innovation Center.

In 2012-13 the company also underwent a widespread “strategic” executive reorganization. Lynne Greene and Thia Breen were named group presidents.

Jane Lauder, global president and general manager, Origins and Ojon, added Darphin to her brand leadership responsibilities. In addition to his duties as president of Bumble and Bumble, Peter Lichtenthal now also oversees Smashbox.

At press time, the company had just revealed a new custom designed beauty advisor wardrobe, created by fashion forward house Opening Ceremony. More than 15,000 advisors worldwide will wear pieces from the collection.

Looking ahead, for fiscal 2014, the Estée Lauder Companies expects global prestige beauty to rise about 3-4%, reflecting continued weakness in certain Southern European countries and Korea. The company continues to expect beauty market growth in the U.S. but at a slower pace than in fiscal 2013. ELC’s goal remains to grow at least one percentage point faster than the industry by focusing on skin care and makeup and reigniting fragrance (such as with Estée Lauder Modern Muse), bringing highly innovative products to market, capitalizing on regional opportunities and serving emerging market consumers. MAC plans to open 20 stores in Africa in the next five years.

Beauty Sales: $9.7 billion

Major Products: Skincare, makeup, fragrances and hair care products marketed under brands including Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series Skincare for Men, Origins, Tommy Hilfiger, MAC, Kiton, La Mer, Bobbi Brown, Donna Karan, Aveda, Jo Malone, Bumble and Bumble, Michael Kors, Darphin, American Beauty, Flirt!, Goodskin Labs, Grassroots Research Labs, Tom Ford, Coach, Ojon, Smashbox, Ermenegildo Zegna.

New Products: M.A.C. Marilyn Monroe Collection, Clinique Even Better Eyes Dark Circle Corrector, Estée Lauder All-Day Lipstick, Estée Lauder Idealist Pore Minimizing Skin Refinisher, Origins Planscription Anti-Aging Foundation, Aveda Invati, La Mer Moisturizing Soft Cream, Tom Ford Violet Blonde, Donna Karan Woman Eau de Parfum.

Comments: The upward trend continues with another of the top players in the global beauty industry. With more than 25 brands in more than 150 countries, The Estée Lauder Companies Inc. (ELC) boasted a strong annual performance for the fiscal year ended June 30, 2012, with a double-digit 10% increase over the previous year, reporting net sales of $9.7 billion, compared with $8.81 billion reported in 2011. Even more impressive—the prior year was also a record-breaking one. And once again, as we’ve seen with other brands on this list, prestige beauty sales outpaced mass for the second year in a row.

Fabrizio Freda, president and chief executive officer, announced that 2011 had been a record year for ELC, one which he said was driven by continued interest in the U.S. and strong growth in China and travel retail. Freda said, “Sales grew at twice the rate of worldwide prestige beauty, owing to the success of our highly innovative products, marketing prowess and personalized services.” He added that despite world economic problems, the company enjoyed strong gains in sales in every geographic region and product category and many distribution channels. Much of the success owed to some of the beauty company’s largest and best-selling brands. A focus on cost savings also proved to be a good strategy as Lauder moved ahead with its long-term plan in this area—realizing savings of $145 million during the year. As a percentage of net sales, advertising, merchandising and sampling expenses increased to support the company’s largest innovations.

Looking at net sales by category, Skin Care rose 14% from the previous year to $4.2 billion; Makeup came in at second place, up 10% to $3.7 billion; fragrance took third place, up only 3% from the prior year, but generating $1.3 billion in sales; hair care grew 7% to $62 million; and Other grew 6% to $60 million.

Skincare expertise remains a priority for Estée Lauder as it continues to build market share around the globe.

Skincare remained a priority for Lauder as it continued to build market share around the globe. Higher-end prestige skincare products took up the slack for a downward trend in certain existing products. Strong sales were seen from the recent launch of Revitalizing Supreme Global Anti-Aging Creme. Continued growth of Idealist Even Skintone Illuminator, Idealist Cooling Eye Illuminator, Advanced Night Repair Synchronized Recovery Complex, and the launch of the reformulated Resilience Lift and Nutritious Vita-Mineral lines of products also contributed good sales figures. Turnaround Overnight Radiance Moisturizer, Moisture Surge Intense and Repairwear Uplifting Firming Cream from Clinique added to the bottom line, as did products from La Mer and Origins.

Makeup net sales increased double-digits, which built upon the 13% growth achieved in the prior year. The category’s growth was primarily generated from strong gains in makeup artist brands, particularly with new products. Higher makeup sales were boosted by the recent launches of Repairwear Laser Focus All-Smooth Makeup and Lid Smoothie Antioxidant 8-Hour Eye Colour from Clinique, as well as the brand’s Even Better Makeup and Chubby Stick Moisturizing Lip Colour balm.

The recent launch of Doublewear Stay-In-Place Makeup and Invisible Fluid Makeup from Estée Lauder touted increased sales. Higher sales from Smashbox and the introduction of the Tom Ford Beauty line of cosmetics also contributed to growth.

Lower sales from certain existing products partially offset these sales gains.

Fragrance sales increased in each region, boosting the 9% gain in the previous year. Popular launches included Estée Lauder Sensuous Nude, DKNY Golden Delicious, Coach Poppy Flower and pureDKNY Verbena. Tom Ford and Jo Malone luxury brands also contributed incremental sales. These increases were partially offset by lower sales of certain Estée Lauder and designer fragrances.

Lauder conceded that its share in fragrance declined, which it said reflects its current focus on improving profitability rather than driving sales and share gains.

Hair care net sales growth was driven by solid gains from Aveda and Bumble and Bumble. Strong increases at Aveda reflect new product introductions, including the recent successful launch of its Invati products; expanded distribution also played a role.

By geographic region, sales remained strongest in The Americas, up 8% over FY 2011 to $4.1 billion; Europe, the Middle East and Africa gained double digits (11%) over the prior year to $3.6 billion; Asia Pacific also achieved double-digit (14%) growth, racking up more than $2 billion.

Net sales growth in The Americas was attributed to the U.S., specifically from new product offerings in the company’s heritage and makeup artist brands, as well as increased sales of higher-end prestige skin care products. As mentioned, growth indicates that prestige beauty trumped mass for the second year in a row, due in part to what the company calls strong innovations and “high-touch” service.

Tom Ford has been a top performer for ELC.

The higher sales also reflect double-digit gains in Latin America, which benefited from growth in Brazil, Chile and Mexico. Sales in North American department stores grew high-single digits and sales of the company’s products online grew double digits.

Despite economic uncertainties in Europe, net sales increased in most countries in Europe, the Middle East & Africa—and in each product category. Sales grew 14%, which was an improvement over the previous year. Double-digit net sales growth was recorded in a number of areas, led by the Middle East, Germany, France, Italy and Turkey, while solid sales gains were generated in the UK. Lower net sales were seen in Russia and the Balkans.

Lauder’s travel retail business continued to generate strong double-digit net sales growth, resulting from successful product launches, higher global airline passenger traffic and a stronger conversion of travelers into purchasers.

Sales grew 10% in the Asia/Pacific region, with the strongest gains seen in Hong Kong, China and Thailand, mostly with skincare and makeup products. Net sales were lower in Australia and Singapore.

In October, Lauder’s Aramis and Designer Fragrances Division signed a licensing deal with fashion designer Tory Burch. Earlier in the year, the division signed licensing agreements with the Ermenegildo Zegna Group and Marni, two Italian fashion brands, representing the men’s and women’s markets, respectively.

Late in 2011, the company—and the entire industry—mourned the passing of Evelyn H. Lauder, senior corporate vice president and head of fragrance development worldwide.

In March, the Lauder brand added to its stable of spokesmodels, signing 23-year old runway fashion star Arizona Muse for skin care, makeup and fragrance. Actress Katie Holmes became the first celebrity face of Bobbi Brown cosmetics.

Early in September, Lauder announced a move specifically aimed at its largest market, with the most potential for growth. In mid-October it launched Osiao, its first Chinese skincare line. Osiao will debut in two Lane Crawford stores in Hong Kong, with an expansion planned into Mainland China.

Looking ahead, ELC expects to further improve its gross margin during fiscal 2013, reflecting favorable pricing and mix. The company also plans to increase global advertising spending on new product launches and successful existing products.

First quarter net sales are forecasted to increase between 5% and 7% in constant currency. In compliance with its long-term strategic plan, the company plans to save between $15- and $20 million in the first quarter of fiscal 2013. Full year net sales are forecasted to grow between 6% and 8% in constant currency.

Beauty Sales: $ 8.8 billion

Estée Lauder’s acquisition of the Smashbox brand proved profitable.

Major Brands/Products: Skin care, makeup, fragrances and hair care brands, including, Estée Lauder, MAC, Bobbi Brown, La Mer, Jo Malone, Tom Ford Beauty, Smashbox, Clinique, Origins, Ojon, Aramis, Lab Series, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, Good Skin, Sean John, Missoni Profumi, Daisy Fuentes, Coach, Aveda, Bumble and Bumble, Darphin.

New Products: Estée Lauder Resilience Lift Collection, Even Skintone Illuminator, Re-Nutriv Ultimate Lift Age-Correcting Collection, Repairwear Laser Focus Wrinkle & UV Damage Corrector, Clinique Moisture Surge, La Mer The Radiant Serum, Aveda Jewels of the Earth, MAC Mickey Contractor Collection, MAC Opulash, Clinique Chubby Stick Lip Color Balms, Coach Poppy, Hilfiger Loud for Her, Estée Lauder Sensuous Nude, MAC Turquatic, Aveda Be-Curly Style-Prep.

Comments: Cost savings initiatives and careful restructuring on the corporate side, and a renewed thirst for prestige products on the consumer side, benefited The Estée Lauder Companies Inc., which reported record results for the fiscal year ended June 30, 2011. Net sales grew to $8.8 billion, a 13% increase over the $7.8 billion reported in the prior year.

Fabrizio Freda, president and chief executive officer, commented, “Fiscal 2011 was an outstanding year for our company.”

The company’s record performance was due to stronger overall business, particularly from the company’s largest brands. Lauder posted strong across-the-board sales gains in its geographic regions and major product categories. Sales also increased in all major product categories within each region. Sales growth was particularly strong in the U.S., travel retail and emerging markets. These results reflect solid increases from higher-margin product launches and the positive impact of more effective advertising spending.

By category, skin care sales led, with net sales of $3.7 billion (up 15% over 2010); followed by makeup, which achieved net sales of $3.37 billion (up 13%); fragrance at $1.23 billion (up 9%); hair care at $432 million (up 4%); and other at $57 million (up 3%).

MAC continued to gain ground for Estée Lauder. The brand re-launched its urquatic collection in glass bottles with a spectrum of gradated colors.

Skin care has become a strategic priority for Lauder, and during the year, the company grew in the category in several countries. The Estée Lauder brand’s sales received a boost from recent launches of the Re-Nutriv Ultimate Lift Age-Correcting Collection, Idealist Even Skintone Illuminator and Idealist Cooling Eye Illuminator. Increased sales were also attributed to the launch of Repairwear Laser Focus Wrinkle & UV Damage Corrector from Clinique. La Mer experienced healthy growth for the year, due in part to The Eye Balm Intense and The Radiant Serum.

Makeup net sales growth reflected strong increases, primarily from the company’s makeup artist brands and certain heritage brands, as well as incremental sales from the acquisition of the Smashbox brand in July 2010. Sales in this category reflected increases across a broad range of products, such as the recent launches of new Pure Color eye and lip products from Estée Lauder and Redness Solutions Makeup from Clinique.

In Fragrance, recent launches of Estée Lauder Pleasures Bloom, Hilfiger Loud for Her, Coach Poppy and pureDKNY were successful, as were Jo Malone and Tom Ford scents.

Hair care net sales increased, primarily from the recent launch of Be Curly Style-Prep and Control Force from Aveda.

By region, net sales were strongest in The Americas ($3.8 billion, up 10%); followed by Europe, the Middle East & Africa ($3.25 billion, up 14%); Asia/Pacific ($1.8 billion, up 17%).

Net sales growth in The Americas came primarily from higher sales in the U.S. The increase reflects double-digit net sales growth from the company’s makeup artist brands and solid growth from heritage brands. The higher sales also reflect the inclusion of the Smashbox brand and strong double-digit gains in Latin America, which benefited from growth in emerging markets such as Brazil. Overall, sales increased in Canada.

Sales increased in virtually all countries in the Europe, Middle East & Africa regions. The company’s travel retail business generated strong double-digit net sales growth for the year, due to successful product launches and increased distribution.

In constant currency, double-digit net sales growth was recorded in a number of countries, led by Russia, the Middle East, France, Benelux, Turkey, Nordic and South Africa. Western Europe posted strong sales growth, particularly in the UK, Germany and Italy. These increases reflect improved retail environments, successful launches of skin care products and higher combined sales from the company’s makeup artist brands.

Lauder generated good sales growth in Asia/Pacific, with most countries posting increases. The strongest gains were seen in China, Hong Kong, Taiwan, Korea and Singapore, primarily due to strong sales of skin care products. Sales in Japan declined somewhat for the year, reflecting the March earthquake that occurred there.

In fiscal 2012, Lauder expects to continue to grow faster than the prestige beauty industry as a whole, and estimates very strong fiscal 2012 first quarter results due, in large part, to the increased effective investment spending in the fourth quarter of fiscal 2011.

In a key management move, Freda has recruited a crony from his former alma mater P&G. Beginning January 1, 2012, Carl Haney becomes executive vice president, global research and development, corporate product innovation, package development. He will replace Harvey Gedeon, who is currently in the role. Might men’s grooming lie in Lauder’s future? Haney spent more than 20 years at P&G, most recently as vice president, R&D, male grooming, Gillette, Braun and devices, leading teams in all aspects of innovation, including product, packaging, process development and engineering.

In June, the beauty firm opened The Estée Lauder Cos. Asian Innovation Center in Shanghai. The center nearly doubles the size of its original lab located at the same site to roughly 18,000 square feet.

Sales: $7.8 billion

Major Products: Skin care, makeup, fragrances and hair care brands, including Estée Lauder, MAC, Bobbi Brown, La Mer, Jo Malone, Tom Ford Beauty, Clinique, Origins, Ojon, Aramis, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, Missoni, Daisy Fuentes, Coach, Aveda, Bumble and Bumble, Darphin, Smashbox.

New Products: Estée Lauder Perfectionist [CP+] Wrinkle Lifting Serum, Superdefense SPF 25 Age Defense Moisturizer and Youth Surge SPF 15; Clinique Superfit Makeup; Estée Lauder Sensuous, Hilfiger Men, DKNY Men, I Am King; Aveda Dry Remedy shampoo and conditioner.

Comments: Skin care brands worked hard to help ease the economic corporate wrinkles at Estée Lauder in 2009, as the firm gained share globally in prestige beauty—an important target for future growth.

It was satisfaction of a goal set forth by president and chief executive officer Fabrizio Freda when he took the reins during an economic low, and focused on future opportunities and building a global customer base. Corporate cost cutting, an initiative to identify certain underperforming stock keeping units and SKU reductions combined with a long-term restructuring plan, resulted not only in the growth of skin care, but in financial results for the fourth quarter and fiscal year ended June 30, 2010 that were sharply higher than the prior-year periods. The company reported savings of $364 million during the year.
For the year, the company achieved net sales of $7.8 billion, a 6% increase compared with $7.32 billion reported in the prior fiscal year. In fiscal 2010, the company generated its largest full-year increase in operating income and operating margin since becoming a public company in 1995. Net earnings for the year were $478.3 million, compared with $218.4 million in the previous year.

Freda may have even surprised himself. He commented, “In fiscal 2010 we surpassed our own financial goals. In this first full year of our long-term plan we made substantial progress advancing our strategic goals and aligned many facets of our company to continue to achieve sustainable, profitable growth.
The company posted sales gains in each of its geographic regions and most major product categories. Strong sales growth came from Estée Lauder’s international business, particularly in travel retail, Asia/Pacific and emerging markets.

Leading brands continued to make progress through refocusing and repositioning, collectively generating sharply improved results, compared with the prior-year periods. At the end of January 2010, the company discontinued the wholesale distribution of its Prescriptives brand products.

By category, skin care, a strategic priority for the company, gained share globally in prestige beauty. Skin care net sales in Asia/Pacific and Europe, the Middle East & Africa grew double digits, while the Americas had a mid single-digit gain. Across each region, the Estée Lauder brand had strong sales from the recent launches of Advanced Night Repair products and Hydrationist Maximum Moisture Crème and Lotion. Also contributing to the increased sales were the successful introductions of Even Better Clinical Dark Spot Corrector, Youth Surge Night Age Decelerating Night Moisturizer and Even Better Skin Tone Correcting Moisturizer SPF 20 from Clinique.

In makeup, net sales posted strong gains in Asia/Pacific and Europe, the Middle East & Africa. Sales in the Americas declined, primarily reflecting lower sales of Prescriptives products. The majority of the sales increase came from the company’s makeup artist brands, driven primarily by their international businesses.

Net sales of fragrance products decreased, largely due to lower sales of certain designer fragrances.

Hair care net sales increased, due to certain styling and hair color products, the recent launches of Smooth Infusion Glossing Straightener and Control Force from Aveda and expanded international distribution at Aveda.

By region, net sales in the Americas region increased, primarily due to higher sales in Canada and Latin America. Clinique posted strong net sales growth of skin care products, while makeup artist brands and various designer fragrances also generated sales gains. Sales decreased modestly in the U.S.

In Europe, the Middle East & Africa, sales increased in all major product categories, except fragrance. Travel retail business was up thanks to an improvement in global airline passenger traffic. Double-digit sales growth was recorded in a number of countries, with the largest gains coming in emerging markets, such as Russia, Turkey and Israel.

The Asia/Pacific region generated solid local currency sales growth, with all countries posting increases, except Japan. Sales in this region had strong growth in each major product category with double-digit gains in skin care and hair care.

In July 2010, Estée Lauder made a move to enter retailers such as Sephora by purchasing the Smashbox brand.

For 2010, net sales are forecasted to grow between 6% and 8% in constant currency. Hair care and skin care are expected to be the leading sales growth categories, followed by makeup and fragrance. Activity is expected to be led by Asia/Pacific, followed by Europe, the Middle East & Africa and the Americas.

In connection with its long-term strategic plan, as well as certain ongoing initiatives, the company expects to realize savings of between $130 million and $140 million during fiscal 2011.

Beauty Sales: $7.3 billion Key Personnel: Leonard Lauder, chairman emeritus; William Lauder, executive chairman; Fabrizio Freda, president and chief executive officer.

Major Products/Brands: Manufacturers and marketers of quality skin care, makeup, fragrance and hair care products sold under brand names including: Estée Lauder, Aramis, Clinique, Origins, M-A-C, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna Karan, Aveda, Jo Malone, Bumble and bumble, Darphin, Michael Kors, American Beauty, Flirt!, Sean John, Missoni, Daisy Fuentes, Tom Ford, Mustang, Coach, Ojon.

New Products: American Beauty—Beloved Moments Perfume; Aveda—Enbrightenment; Bobbi Brown—Metallic Eye Shadow; Bumble and Bumble—Curl Conscious; Clinique— Youth Surge SPF 15 Age Decelerating Moisturizer; Coach—Legacy fragrance and lipsticks; DKNY—DKNYMen; Estée Lauder— Sensuous; Jo Malone—Sweet Lime & Cedar collection; MAC— Hello Kitty; Ojon—Tribal Indulgences Batana shower gel and body cream; Origins—Dr. Andrew Weil for Origins Plantidote Mega-Mushroom Skin-Calming Face Mask.

Comments: Despite its aggressive actions to thwart the effects of the downturn—including reducing sizing (and thus pricing) on many of its products, The Estée Lauder Companies reported fiscal year net sales of $7.3 billion, a 7% decrease compared with $7.9 billion reported in the prior fiscal year. Excluding the impact of foreign currency translation, net sales declined 2%.

During the year, all product categories and geographic regions were negatively impacted by the current global economy. These conditions were most evidenced in the Americas and Europe, the Middle East and Africa regions. However, for the full fiscal year, in the Asia/Pacific region, Estée Lauder did well, reporting double-digit sales growth in constant currency as well as double-digit gains in operating income. Although sales shrank, distribution channels widened.

By category, in skin care, sales in constant currency increased, with double-digit growth in Asia/Pacific, but decreased in the company’s other regions. Several new and existing products aided net sales in the skin care category, but were offset by lower sales from other existing products. Estée Lauder gained share in this category during the fiscal year in U.S. prestige department stores and in certain countries in stores where its products are sold. Across each region, the recent launches of Perfectionist [CP+] Wrinkle Lifting Serum and the new Time Zone line of moisturizing products by Estée Lauder, as well as Superdefense SPF 25 Age Defense Moisturizer and Youth Surge SPF 15 Age Decelerating Moisturizer from Clinique, contributed incremental sales.

Estée Lauder’s MAC Holiday Collections feature shimmery silvery compacts, makeup bags and boxes adorned with playful bubbles to encourage merry sales.

Makeup sales increased double-digits in Asia/Pacific and were relatively unchanged in Europe, the Middle East & Africa, which were more than offset by declines in The Americas. The net sales decrease was attributable primarily to Estée Lauder’s heritage brands. Makeup artist brands also reported an overall global sales decline during the year. On the positive side were products such as the reformulated Superfit Makeup and High Impact Lip Colour SPF 15 from Clinique, as well as Signature Blush and TurboLash All Effects Motion Mascara by Estée Lauder. Incremental net sales to new international points of distribution also helped offset the decline in this category.

Fragrance continued to be a challenging product category for the company, with sales declining in each region. The largest decrease was due to lower sales of designer fragrances. Also contributing to the decline were lower sales of certain Estée Lauder and Clinique fragrances. The recent successful launches of Estée Lauder Sensuous, Hilfiger Men by Tommy Hilfiger, I Am King Sean John, and the new DKNY Men partially offset these declines.

An overall decline in net sales in Europe, the Middle East & Africa was led by the company’s travel retail business, due to a drop in air passenger traffic, and weakened sales in Spain, France and Italy. The UK posted solid sales gains, while double-digit growth was recorded in a number of regions, including Russia and the Middle East. The Asia/Pacific region generated solid growth, with every country posting increases, except Japan. More than half of the countries had double-digit growth, with the strongest gains generated in Korea, China, Hong Kong and Australia. Sales growth in China, the company’s largest emerging Asian market, was predominately due to strong like-door growth, expanded distribution and the launch of e-commerce for the Estée Lauder and Clinique brands.

Struck hard by the downturn, Estée Lauder announced early in 2009, that it would cut 2,000 jobs over the next two years. Along with inventory reduction and a hiring freeze, the plan is to reduce expenses by $450 to $550 million over the next four years. In July, Ronald S. Lauder retired from the board, but will continue to serve as chairman, Clinique Laboratories, LLC and as an officer of The Estée Lauder Companies. His daughter, Jane Lauder, senior vice president/general manager of the Origins brand, takes over his position.

Fourth quarter sales were especially dark, with consolidated revenue for the quarter falling 16.4% to $1,682.8 million, compared to $2 billion for the same period last year. Skin Care sales fell 12.9% to $687.8 million; Makeup sales by 11.8% to $665.2 million; Fragrance by 35.1% to $220.4 million; and Hair Care by 9.8% to $104.5 million.

By region, sales in The Americas fell 14.3% to $774 million; Europe, the Middle East & Africa sales dropped 24% to $624 million. Good news came in the Asia/Pacific region, however, where sales rose 1.8% to $292.9 million.

Now in fiscal 2010, Estée Lauder continues to strategize its way through the economy. Unable to predict variables such as consumer confidence and restocking, its restructuring plan focuses on strengthening the company over the long-term. In mid-September, the company announced that it would discontinue its 30-year-old Prescriptives brand to focus on higher-performing brands.

Sensuous was one of several successful launches that helped to offset Estée Lauder’s hard-struck fragrance sector.

Beauty Sales: $7.9 billion for the year ended June 30, 2008

New Products:  Literally hundreds of launches, including: Estée Lauder—Private Collection Tuberose Gardenia Fragrance Collection, Sensuous Fragrance Collection. Clinique—Even Better Skin Tone Corrector. Prescriptives—Instant Gratification Skin Renewal Peel. Origins—Origins Organics Collection. M.A.C.— Fafi for MAC. Donna Karan/DKNY—Donna Karan Gold. Aveda—Aveda Men. Jo Malone—Kohdo Wood Collection. Sean John Fragrances—Unforgivable Woman Scent Spray.

Comments: Activity was on overtime at Estée Lauder where brands reached into expanding markets and corporate reorganization kept pace—and generated rumors. In large part due to strong growth in international sales and earnings, the Estée Lauder Companies Inc. reported $7.9 billion in net sales for its fiscal year ended June 30, 2008, a 12% increase over the $7 billion reported in the previous year. Fourth quarter sales of $2 billion marked a strong 14% increase from $1.76 billion in the comparable quarter of fiscal 2007. Makeup accounted for the highest percentage of net sales at $3 billion, while skin care products showed the greatest leap percentage-wise, rising more than 15% above the previous year’s figures. Fragrance rose nearly 5% over the previous year to $1.43 billion and hair care came in at $427 million. Sales increased in all product categories within each of the company’s geographic regions.

Skin care sales growth was strongest in the Asia/Pacific region, due to new whitening products and higher sales in Greater China. In addition to sales growth from certain existing products, the skin care category benefited from strong worldwide sales of recent products, such as Idealist Pore Minimizing Skin Refinisher and Cyber White EX by Estée Lauder and Redness Solutions from Clinique. Clinique has collaborated with Allergan to offer clinically proven skin care products to complement in-office aesthetic procedures. Double-digit gains from the La Mer brand were realized, due in part to the recent launch of The Eye Concentrate.

The makeup category posted solid double-digit sales growth internationally and a single-digit increase in the Americas. Double-digit growth in the company’s makeup artist brands contributed more than 65% of the incremental sales. Also contributing to the growth were incremental sales from the recent launches of Estée Lauder Signature Hydra Lustre Lipstick and Supermoisture Makeup from Clinique.

Fragrance sales growth was strongest in Europe, primarily driven by newer fragrance offerings, followed by gains in Asia/Pacific and the Americas. Fragrance sales, while being compared favorably to the previous year’s figures, continue to be affected by the soft retail environment in the U.S. Contributors to the sales growth include Sean John Unforgivable Woman, Dreaming Tommy Hilfiger and DKNY Be Delicious. Private Collection Tuberose Gardenia, developed by Aerin Lauder, granddaughter of the founder, captured HBA’s IPDA for Prestige Fragrance. Sensuous was the company’s biggest launch of the year.

Sales of hair care products increased, due to the inclusion of the Ojon brand, which was acquired in July 2007, and higher sales from Aveda and Bumble and bumble. Aveda celebrated its 30th anniversary with the re-release of its Vintage Clove Shampoo, capped with a recycled closure made from Estée Lauder’s highly touted bottle caps recycling program.

Fabrizio Freda, who had served as president of global snacks at Procter & Gamble, was named president and chief operating officer, positioned to take over the top job of chief executive within the next two years from William P. Lauder, grandson of the company founder. His appointment fueled speculation over a potential takeover by P&G.