Estée Lauder full-year sales slide 10% with ‘slow’ travel retail recovery

By Kristiane Sherry |

Estée Lauder hosted a summer campaign across Hainan.

The Estée Lauder Companies saw its 2023 full-year net sales results sink by 10% to $15.91 billion as travel retail across Asia remains suppressed.

Despite the sales crunch, the business says it expects to return to growth in fiscal 2024 with 1% fourth quarter gains indicating the start of a rebound.

Net earnings over the full year amounted to $1.01bn, compared to $2.39bn over the 12 months prior. Earnings per share shrank by over 57% to $2.79. The negative currency effect on a reported basis stood at 5%.

The business’s skincare portfolio took the greatest hit, with sales tumbling by 14% for the 12 months to 30 June 2023. 

Haircare however saw 3% gains on new releases and line extensions. Makeup saw 3% declines, while the fragrances stable was broadly flat. 

Licence terminations and the fourth quarter Tom Ford acquisition also hit figures. 

Estée Lauder full year sales: Asia slow to recover

Travel retail net sales fell by double digits on the “slower than expected” recovery across Asia, the company said in its statement. 

The channel saw “strong” double-digit sales increases across EMEA and the Americas as travel resumed strongly compared to the previous year. 

Estée Lauder said increased activations, in-store staffing and advertising also boosted sales. 

Estée Lauder full year sales table

Estée Lauder full year sales slipped by 10% for the 12 months to 30 June 2023.

“We returned to organic sales growth in the fourth quarter, delivering our outlook,” said Fabrizio Freda, President and Chief Executive Officer. 

“Momentum continued in the markets of EMEA and Latin America, and accelerated strongly in Asia/Pacific led by mainland China and Hong Kong SAR.

“For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in skincare, and we continued to experience softness in North America. 

“Fragrance excelled, up double digits in every region, and makeup improved sequentially to double-digit growth in the fourth quarter as more markets emerged into the post-pandemic era.

“For fiscal year 2024, we expect to return to organic sales growth and deliver sequentially improving margin throughout the year, leveraging the strong equity and desirability of our brands. 

Estée Lauder full year sales by geographic region

Estée Lauder FY2023 sales by geographic region.

“We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America. In Asia travel retail, we are taking actions to capture demand from the returning individual travellers and continuing to reduce inventories in the trade as we navigate the current market headwinds. 

“In this new fiscal year, we also intend to set the stage for a stronger fiscal year 2025 acceleration, with a very robust innovation pipeline planned across the two years and progressive margin rebuilding plans.”

Continued Covid impact

Estée Lauder cited ongoing disruption from the Covid-19 pandemic as a significant downward pressure on sales.

Most notably, the statement said, the pace of recovery across both Asia travel retail and mainland China was “slower than anticipated”.

Prolonged closures in Hainan was followed by low conversion, and then some retailers tightened their inventory, the financial statement continued.

Estée Lauder full year sales by product type

Skincare saw the biggest declines across the Estée Lauder business.

Korea travel retail was also hit by slower sales as the market transitioned to new regulations following the pandemic peak. 

The resumption of international flights, visa processing and fewer group tours also hampered recovery, Estée Lauder said. 

While elsewhere recovery broadly “progressed”, in the US sales were impacted by both a weaker retail performance, inventory tightening, inflation pressures, and recession concerns. 

2024 outlook

Estée Lauder said it was moving into its 2024 financial year with a focus on delivering balanced and profitable growth across “regions, brands, product categories and channels”.

Rebalancing inventory across Asia travel retail is expected to offset anticipated results more widely. The company says it is looking at a “gradual transition” of selling to individual travellers”. 

Growth should return in fiscal 2024, and the target is to “progressively rebuild” margins over “the next few years”. The business is targeting reported net sales gains of 5-7% over the coming 12 months. 

Planned strategic investments include innovation and advertising across Asia travel retail, and opening the company’s first manufacturing facility in Asia. 

Earlier this year Estée Lauder teamed up with China Duty Free Group to host a Travel Beautifully campaign for its flagship brand across Hainan island.

Above tables source: The Estée Lauder Companies.

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