Net sales and operating income in nearly all of the company’s product categories and geographic regions were impacted by a stronger US dollar in relation to most currencies.

The Estée Lauder Companies reported net sales of $15.61bn for the fiscal year ended 30 June 2024, a decrease of 2% from $15.91bn in the prior year. Organic net sales decreased 2%, which it primarily attributed to ongoing softness in overall prestige beauty in mainland China and a decline in Asia travel retail.

Partially offsetting these declines was growth in Hong Kong SAR, overall in the markets of Europe, MEA, Japan and Latin America.

The Company reported net earnings of $0.39bn, compared with net earnings of $1.01 billion in the prior year. Its reported effective tax rate was 47.0%, compared with 27.7% in the prior year, which it said reflected the impact of: nondeductible goodwill impairment charges associated with the Company’s Dr.Jart+ reporting unit; a higher effective tax rate on the Company’s foreign operations due to the geographical mix of earnings; and the unfavorable impact associated with previously issued stock-based compensation.

Reported net sales decreased 2%, including royalty revenue from the Q324 acquisition of the Tom Ford brand, the impact from foreign currency translation, and returns associated with restructuring and other activities.

Net sales and operating income in nearly all of the company’s product categories and geographic regions were impacted by a stronger US dollar in relation to most currencies.

Skin care net sales decreased 3%, hair care net sales decreased by 4% and makeup net sales decreased 1%, though fragrance net sales increased by 2%, and its Clinique net sales grew by over 10%.

Fabrizio Freda, President and CEO said: “In fiscal 2024’s fourth quarter, we achieved our organic sales outlook and exceeded expectations for profitability, closing a difficult year. Organic sales and adjusted EPS returned to growth in the second half. For fiscal 2025, we anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers.”

Asia Pacific

Estée Lauder net sales in APAC decreased by 3% and Operating income decreased primarily due to: the year-over-year increase in goodwill and other intangible asset impairments of $371 million relating to Dr.Jart+; a regional decline in net sales; a decrease of $43m, offset by a corresponding increase in The Americas, though the company noted this was partially offset by disciplined expense management.

However in Hong Kong SAR, net sales rose strong double digits, which the company said was reflective of category growth in skin care, fragrance and makeup, driven by the increase in travel compared to the prior year.

Similarly, Net sales in Japan increased double digits, led by strong double-digit growth in fragrance, driven by domestic and traveling consumers, which fueled growth in nearly all channels of distribution.

Net sales in mainland China decreased, primarily due to ongoing softness in overall prestige beauty, including during holiday and key shopping events.

The Americas

Net sales increased double digits in Latin America and were flat in North America. Net sales grew in Latin America in nearly every market and product category and especially in Mexico, with net sales increasing double digits.

Operating results increased, primarily driven by: an increase of $174m, which was offset by corresponding decreases in EMEA and Asia Pacific; the year-over-year decrease of other intangible asset impairments of $107 million relating to Too Faced and Smashbox; and a full year of royalty revenue from the Q324 acquisition of the Tom Ford brand.

Estée Lauder noted these increases were partially offset by: strategic investments to support advertising and promotional activities; $55m of lower intercompany royalty income due to the decrease in income from the Company’s travel retail business; and an unfavorable year-over-year comparison in adjustments to stock-based compensation expense related to the Company’s performance share awards.

EMEA

Net sales decreased 2% in the region, primarily due to the challenges in Asia travel retail, which were partially offset by net sales growth in other regions.

Global travel retail net sales decreased by nearly 10% as Estée Lauder set about resetting its inventory levels.

Total net sales in the markets of EMEA grew low-single-digits, reflecting growth in skin care and makeup and from the company’s luxury fragrance brands.

Total net sales in the markets of EMEA grew low-single-digits, reflecting growth in skin care and makeup and from the company’s luxury fragrance brands.

Operating income was virtually flat, driven by: a decrease of $131m, which was offset by a corresponding increase in The Americas; a decline in net sales; and an increase in spending to support advertising and promotional activities and targeted expanded consumer reach.

Estée Lauder noted this decline was partially offset by lower costs of sales, including lower obsolescence charges; $55m of lower intercompany royalty expense due to the decrease in income from the global travel retail business; and a reduction in royalty expense due to the Q324 acquisition of the Tom Ford brand.

Category change

In skin care, net sales from Estée Lauder, Clinique and Dr.Jart+ declined, though reported and organic net sales increased double digits in the second half of fiscal year 2024, driven by double-digit growth from La Mer, Estée Lauder and The Ordinary.

For makeup reported and organic net sales increased low-single digits in the second half of fiscal 2024, primarily driven by Estée Lauder and Clinique. Further, Clinique net sales increased double digits, primarily driven by continued strength across the lip and mascara subcategories.

“In the rest of our business, we are planning to deliver improved performance across both developed and emerging markets. To fuel this, our priorities are reigniting Skin Care, capitalizing on the multiple growth drivers of high-end Fragrance, moving faster in leveraging winning channels, launching accretive innovation inclusive of new, big opportunities, and enhancing our precision marketing capabilities.” Fabrizio Freda, President and CEO.

For its fragrance products, Le Labo net sales grew strong double digits, nearly doubling in AsiaPacific, driven by its Santal 33 and the City Exclusive collection, which targeted expanded consumer reach globally, and new product innovation, such as Lavande 31.

Finally, hair care net sales declined 4%, primarily due to Aveda in North America, owing yo softness in the salon channel and the company’s direct-to-consumer distribution channels. Operating results decreased primarily reflecting the decline in net sales.

Freda to retire

Prior to the release of its fiscal year 2024 results, Fabrizio Freda informed the Board of Directors of his intention to retire at the end of fiscal year 2025.

On his retirement, Mr. Freda said: “Leading The Estée Lauder Companies for sixteen years, is and has been, a true honor and privilege. I am so proud of our company’s incredible accomplishments, and to have built the most talented, dedicated, and passionate team in the industry. Together we have transformed the Company in beautiful ways; and we have set new standards for excellence.

I will continue to be fully focused on the execution of our strategic reset and the Profit Recovery and Growth Plan, as we continue to address the current challenges. As we manage for the long term, now is the right time to look ahead to the next generation of leadership for this great company. I look forward to continuing to work closely with our Board of Directors in the selection of my successor and ensuring a seamless transition.”

Freda has announced his intention to retire from the position of CEO in FY25.

“On behalf of the entire Board of Directors and the Lauder family, we wish to extend our sincere gratitude to Fabrizio for over sixteen years of devoted service to the Company,” said William P. Lauder, Executive Chairman, who added: “We look forward to celebrating Fabrizio’s many amazing accomplishments as his formal retirement date nears. Until then, the Board, Fabrizio and the entire leadership team are laser-focused on navigating the current challenges faced by the Company.”

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