Update: The Estée Lauder Companies ranks at #3 on our latest report Top 20 Global Beauty Companies 2021.

The Estée Lauder Companies is #3 on this year's list of Top Global Beauty Companies.

Below is a look at the company's 2020 highlights, recent acquisitions, best-selling brands, and latest innovations.

Beauty Sales

$14.3 billion

Key Personnel

• William P. Lauder, executive chairman
• Fabrizio Freda, president and chief executive officer
• John Demsey, executive group president
• Jane Hertzmark Hudis, executive group president
• Tracey T. Travis, executive vice president and chief financial officer
• Carl Haney, executive vice president, global research and development, corporate product innovation, package development
• Jane Lauder, executive vice president, chief data officer
• Leonard A. Lauder, chairman emeritus
• Ronald S. Lauder, chairman, Clinique Laboratories
• Stéphane de La Faverie, group president
• Aerin Lauder, founder and creative director, Aerin, and style and image director, Estée Lauder
• Michelle Freyres, senior vice president, global general manager, Clinique

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. 

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