Jamie Matusow, Editor10.01.14
Update: The Estée Lauder Companies ranks at #3 on our latest report Top 20 Global Beauty Companies 2021.
New YORK, NY
www.ESTEELAUDER.com
Beauty Sales: $10.9 billion
Key Personnel: Leonard A. Lauder, chairman emeritus; William P. Lauder, executive chairman; Ronald S. Lauder, chairman, Clinique Laboratories; Fabrizio Freda, president and chief executive officer; John Demsey, group president; Carl Haney, executive vice president, research and development, product innovation and brand product development; Lynne Greene, group president of Clinique, Origins, Ojon, Aveda and Darphin; Cedric Prouvé, group president, international; Daniel Annese, global brand president, Aramis and Designer Fragrances.
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.
New YORK, NY
www.ESTEELAUDER.com
Beauty Sales: $10.9 billion
Key Personnel: Leonard A. Lauder, chairman emeritus; William P. Lauder, executive chairman; Ronald S. Lauder, chairman, Clinique Laboratories; Fabrizio Freda, president and chief executive officer; John Demsey, group president; Carl Haney, executive vice president, research and development, product innovation and brand product development; Lynne Greene, group president of Clinique, Origins, Ojon, Aveda and Darphin; Cedric Prouvé, group president, international; Daniel Annese, global brand president, Aramis and Designer Fragrances.
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.