ELC reports 11% Q1 net sales decrease due to China’s COVID-19 constraints
03 Nov 2022 --- Estée Lauder Companies (ELC) is reporting net sales of US$3.93 billion for its 2023 fiscal first quarter, a decline of 11% from $4.39 billion in the prior-year period. The company shares that COVID-19 restrictions in China have posed a more significant challenge than expected. Nonetheless, fragrance, makeup and haircare maintained growth.
“For the first quarter, we delivered organic sales in line with our outlook and adjusted earnings per share ahead of it even as the transitory external pressures of COVID-19 restrictions in China, high inflation globally, and a strong US dollar intensified. Our multiple engines of growth strategy empowered us to seize prevailing growth opportunities amid the complexity,” explains Fabrizio Freda, president and CEO at ELC.
The company shares that tourism in Hainan, China, was curtailed, leading to strict inventory management by retailers and travel retail. Additionally, brick-and-mortar options in the rest of the region were limited.
“These greater pressures were offset by several markets in Asia=Pacific, as well as many emerging and developed markets in the West, which delivered strong organic net sales growth.”
Strong growth is expected to resume gradually in the second half of fiscal 2023.
Makeup and fragrance show resilience
The company expects that headwinds will continue to pressure into the second quarter. However, strong growth is expected to resume gradually in the second half of fiscal 2023.
“The Fragrance and Hair Care categories rose by double digits organically and Makeup’s renaissance continued to realize its promise in markets reopening,” continues Freda.
“The Skin Care segment was the most challenged by COVID-19 restrictions in China, which significantly impacted the category in travel retail. Thirteen brands grew organically, as MAC excelled in Makeup, La Mer in luxury Skin Care, Jo Malone London in Fragrance,and Aveda in Hair Care. Encouragingly, we realized strong double-digit gains in many large developed and emerging markets around the world.”
ELC reported net earnings of US$489 million compared with the net earnings of US$692 million in the prior year.
Personal care financials
In related financial news, Beiersdorf showed particular resilience, amid a complex economic environment, in its flagship Nivea cream and its dermocosmetics brands Eucerin and Aquaphor – the derma brands are growing organically at a 25.3% annual rate.
Additionally, L’Oréal reported strong growth, with sales of €27.94 billion (US$27.16 billion) achieved by the end of September. L’Oréal Luxe and Active Cosmetics gained 22% and 31.5% growth within the company's divisions.
Net sales for the first quarter of the Procter & Gamble Company’s fiscal year 2023 were US$20.6 billion, up 1% from the previous year’s period.
Edited by Venya Patel
