In the first fiscal quarter of 2019, Estée Lauder Companies (ELC) registered an 8% increase in sales to $3.52bn, driven by particularly ‘robust growth’ in Asia and travel retail.

 

According to Fabrizio Freda, President and Chief Executive Officer, sales in China, Hong Kong, Japan and every country in Southeast Asia grew by double digits.

 

“In China, our sales accelerated,” he told analysts during a fiscal Q1 earnings conference call. “Consumer demand for our products was also vibrant in our other emerging markets excluding China.

 

“Importantly, our retail sales growth in the United States turned positive and global e-commerce and travel retail posted significant increases.”

 

Many key travel retail markets stood out for ELC including the UK, Italy, Germany and Turkey. “This success contributed to our strong double-digit retail and net sales growth, far, far outpacing the 6% rise in international passenger traffic,” added Freda.

 

 

EXPANDED DISTRIBUTION FOR ARTISANAL FRAGRANCES

Freda highlighted that ELC has expanded distribution for its artisanal fragrance brands, which is helping to increase the company’s share in European travel retail locations.

In addition the company highlights that in Q1, net sales in Europe, the Middle East and Africa rose 16%, driven by strong double-digit increases in the global travel retail business.

 

ELC was able to increase its points of sale in TR, particularly for its less distributed brands, and enter more doors overall. However the underlying retail trend in the Middle East continued to be challenging.

 

“We are making good progress on increasing passenger conversion with new programs,” he insisted.

 

“We believe that our travel retail business will continue to benefit in the long term from favourable fundamentals, including growing passenger traffic, increased conversion of passenger to shopper and a broader equity-building distribution of our new brands.”

 

STRONG DOLLAR IMPACTS ‘MOST CURRENCIES’

Net sales and operating income for the company’s activities outside of the United States were impacted by a stronger US dollar in relation to most currencies, says ELC.

 

Company-wide, skincare appeared to be a standout category for ELC, which registered strong net sales particularly in Asia, travel retail and online. Operating income increased sharply, primarily from La Mer and Estée Lauder, reflecting higher net sales.

Click to enlarge tables.

Growth in makeup from MAC, Estée Lauder and Tom Ford Beauty was partially offset by lower net sales for Clinique and Smashbox. Makeup operating income declined, reflecting lower net sales at Smashbox and planned investments at Too Faced to support new and existing products, as well as international expansion.

 

‘Certain designer fragrances’ registered lower sales, but Tom Ford, Le Labo, By Kilian and Jo Malone London all posted growth.

 

JO MALONE JOINS TMALL

“Increased net sales from Tom Ford Beauty reflected the continued success of Private Blend fragrances and the launch of Ombre Leather,” said ELC. “Jo Malone London’s net sales increase primarily reflected the launch of Honeysuckle & Davana and expanded targeted consumer reach, including the brand’s opening on Tmall in China.”

Hair care net sales increased, primarily reflecting higher net sales from Aveda, due to continued growth from the Invati Advanced line of products and the launch of Cherry Almond Softening Shampoo and Conditioner.

 

ELC says it remains comfortable with its sales growth expectation of 7% to 8% in constant currency for the year, which assumes some moderation of growth in China and travel retail in the second half, ‘reflecting the current geopolitical and economic risks’.