Estée Lauder Companies Q3 results lifted by stronger Asia travel retail
03 May 2024 --- In its third quarter of fiscal 2024, Estée Lauder Companies (ELC) attributes a 6% organic net sales increase to double-digit growth in Europe and the EMEA region, driven by stronger sales in Asia travel retail.
The company reports net sales of US$3.94 billion for its third quarter ended March, an increase of 5% from US$3.75 billion in the prior-year period.
The growth in Asia travel retail was driven by higher shipments reflecting significant sequential improvement in retail sales trends and continued progress in achieving targeted retailer inventory levels, as well as lower shipments in the prior-year period due, in part, to transitory headwinds.
The growth in organic net sales also reflected increases in several developed and emerging markets in Asia/Pacific, the Americas and EMEA, including strong double-digit growth in the company’s “Priority Emerging Markets.” Net sales increased in nearly all product categories, led by the return to high-single-digit growth in Skin Care.
“For the third quarter of fiscal 2024, we delivered our organic sales outlook, exceeded expectations for profitability and continued to improve working capital,” says Fabrizio Freda, president and CEO of ELC.
“La Mer, Estée Lauder, Jo Malone London, Le Labo and The Ordinary led organic sales growth, driven by beloved hero products and highly sought innovation. Asia travel retail returned to organic sales growth as developed and emerging markets across Asia/Pacific, EMEA and Latin America further contributed.”
The Ordinary, Estée Lauder, Jo Malone London, Le Labo and La Mer led organic growth, driven by hero products and innovation (Image credit: The Ordinary).Expanding consumer reach
The company reported net earnings of US$330 million, compared with net earnings of US$156 million in the prior-year period. During the second half of fiscal 2024, ELC highlighted strategic expansions of its consumer reach, including Clinique’s debut on the US Amazon Premium Beauty store, which “greatly exceeded” its retail sales expectations.
The company also inaugurated new flagship stores in Asia-Pacific for Jo Malone London and Le Labo.
ELC highlights progress “across all work streams” for its Profit Recovery Plan, setting the stage to deliver its US$1.1 to US$1.4 billion of incremental operating profit in fiscal years 2025 and 2026.
This also generates funds to reinvest in its brands and consumer-facing initiatives to “accelerate sustainable sales and profit growth as a faster and leaner organization.”
“With our third quarter results and fourth quarter outlook, we are confident that the second half of fiscal 2024 will prove to be an inflection point for our company performance,” emphasizes Freda.
“We expect accelerating momentum in organic sales growth in the fourth quarter and for operating margin in the second half of fiscal 2024 to not only be stronger than the first half but also to expand from the year-ago period.”
Category performance at a glance
Estée Lauder saw a 9% increase in Skin Care net sales, driven by growth in “every geographic region.” La Mer and Estée Lauder brands were top performers, benefiting from both established favorites and new product launches.
Net sales from La Mer rose strong double digits globally, driven by double-digit growth in EMEA and Asia/Pacific, benefiting from continued strength from hero products, including The Treatment Lotion, Crème de la Mer and The Concentrate and new product innovation, such as The Moisturizing Fresh Cream.
Estée Lauder’s net sales grew mid-single digits, primarily due to the Advanced Night Repair and Revitalizing Supreme product franchises and benefiting from new product innovation, including Re-Nutriv Ultimate Diamond Transformative Brilliance Soft Creme Moisturizer primarily in mainland China.
Makeup sales grew 4%, fueled by travel retail and strong growth in Latin America and Korea. The company credits the Estée Lauder Double Wear line and Clinique’s “continued strength” across the eye, face and lip subcategories for this increase.
Net sales from Le Labo rose strong double digits globally (Image credit: Le Labo).Fragrance sales grew only 1% overall. While luxury brands within the category saw growth, Estée Lauder fragrances declined. Jo Malone London and Le Labo continued their upward trajectory.
Despite lower sales, Estée Lauder highlights strategic investments in fragrance to expand global consumer reach and support the growth of luxury brands within the category.
Jo Malone London net sales increased high-single-digits, led by strong double-digit growth in EMEA and The Americas, primarily driven by hero product franchises, including English Pear and Wood Sage & Sea Salt and new product innovation, such as Red Hibiscus.
Net sales from Le Labo rose strong double digits globally and in Asia/Pacific, primarily driven by the “continued success of hero product franchises,” such as Santal 33 and Another 13, and benefited from targeted expanded consumer reach globally.
Meanwhile, Hair Care sales dipped 4% due to weakness in Aveda’s North American salon channel. The company is working on managing expenses to offset this decline.
By Benjamin Ferrer
