ELC grows net sales +9%, but forecasts slowdown in travel retail and China

By Charlotte Turner |

Estee_Lauder_haitaingbayEstée Lauder Companies (ELC) President and CEO, Fabrizio Freda, highlighted travel retail as one of the ‘engines of growth’ in the company’s fiscal 2019 and fiscal Q4 results, along with ‘nearly every market in Asia Pacific.

 

However, the company also states that the escalation of trade tensions between the US and China, increase of tariffs in China and the gradual moderation of net sales growth in China and travel retail from recent levels, are likely to impact performance for the group in fiscal 2020.

 

“The company has not experienced this moderation to date and continues to be optimistic about the strength of long-term growth in those areas,” adds ELC.

 

“Many engines drove our (fiscal 2019) growth,” says Freda.

 

“They included: nearly every market in the Asia/Pacific region and many other important emerging markets around the world; our skin care category in every region; the travel retail and online channels globally; and compelling innovations and high-quality products, which drove strong repeat purchases.

 

Fabrizio-Freda-Estee-Lauder

Estée Lauder Companies (ELC) President and CEO, Fabrizio Freda.

ELC’S NET SALES REACH $14.86BN

“Globally, three of our four largest brands grew strongly as did many of our small and mid-sized brands.

 

Freda also noted that the results were ‘particularly impressive’ given macro volatility and challenges in several markets.

 

For fiscal year ended June 30, 2019, ELC’s net sales grew 9% to $14.86 billion. Excluding the negative impact of currency translation and the adoption of the new revenue recognition accounting standard, net sales increased 12%.

 

In makeup, MAC’s net sales increase was led by double-digit growth from Greater China, Japan and the Middle East, as well as travel retail, according to ELC.

 

Net sales from Tom Ford Beauty increased double-digits, primarily driven by its lip colour and eye shadow products in Asia Pacific and the travel retail channel, as well as targeted expanded consumer reach, including the brand’s highly successful launch on Tmall.

Estée-Lauder-Companies-FY2019-by-product-category

EMERGING MARKETS

Emerging market growth outpaced the total brand growth, driven by China, Israel, India and Singapore.

 

In the Europe the Middle East & Africa, the company generated strong net sales growth in the region, both on a reported basis and in constant currency.

Mac-Delhi-Duty-Free-departures

MAC’s net sales increase was led by double-digit growth from Greater China, Japan and the Middle East, as well as travel retail, according to ELC.

ELC says this was “primarily due to strong net sales growth from the travel retail channel, online and most emerging markets in the region”.

 

Net sales in the Middle East, including Turkey, as well as in Russia and India grew double-digits in constant currency.

 

LOWER SALES IN WESTERN EUROPE

This growth was partially offset by lower net sales in certain Western European markets, primarily Benelux, as well as in the United Kingdom.

Estee-Lauder-Companies-results-by-region-FY2019

“Net sales growth from the company’s travel retail channel was broad-based, with many of the top 10 brands in the channel growing double digits, led by Estée Lauder, La Mer, MAC, Tom Ford Beauty and Origins.

 

“Growth also reflected the increase in international passenger traffic, improved conversion and strategic investments to support both new and existing products.

 

“In addition, successful innovation and expanded targeted consumer reach also contributed to growth.”

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