La Mer boosts travel retail skincare for Estée Lauder as Q2 earnings hit $4.9bn

By Luke Barras-hill |

Estée Lauder, La Mer and Clinique improved skincare net sales in FY21 Q2.

The Estée Lauder Companies has reported strong double-digit growth in travel retail net sales for La Mer in the three months ending 31 December 2020.

La Mer experienced double-digit growth in every region spearheaded by Asia Pacific, with notable strength in China, as skincare net sales lifted by 28% (reported) to $2,819 million for the period in question.

Estée Lauder’s total net sales rose by 5% to $4,853 million, according to the beauty giant’s fiscal 2021 second quarter results announced on 5 January.

GROWTH RETURNS

Growth in Asia Pacific, travel retail and global online net sales was partially offset by lower footfall in shops and – to a lesser degree – temporary retail store closures linked to Covid-19.

Fabrizio Freda, President and Chief Executive Officer said: “We are proud to have returned to growth in our second quarter, earlier than we anticipated, demonstrating the enduring success of our multiple engines of growth strategy.

Source: The Estée Lauder Companies. Click to enlarge.

“The powerful engines of Skin Care, Fragrance, Asia/Pacific, Travel Retail in Asia, and global Online fuelled our performance despite the increasing complexity of the pandemic.

“Ten of our brands grew, signifying the broad-based strength of our portfolio, hero products and innovation, led by double-digit sales growth from the Estée Lauder and La Mer brands.

“For holiday and key shopping events, we welcomed new consumers and deepened relationships with existing consumers.

“We successfully combined technology and data with our talented beauty advisors to deliver high-touch services, enriching the online shopping experience. We invested in our growth engines and employed strict cost discipline in other areas, driving double-digit adjusted earnings growth.”

Estée Lauder said Covid-19 continues to cause sizeable disruption to the firm’s operating environment, temporarily affecting retail traffic and certain consumer preferences.

Government restrictions in various parts of the world aimed at deterring further transmission of the virus meant the short-term closure of ‘non-essential’ business, quarantines, social distancing and curtailment of international travel, all of which have struck travel retail.

NO FULL-YEAR SALES GUIDANCE

However, increased travel in Asia Pacific resulted in travel retail net sales growing by single digits, with Mainland China, Korea and several other markets in the region demonstrating traction.

On a regional basis, Asia Pacific posted a net sales increase of +35% (reported), against declines in Europe, Middle East & Africa and The Americas of -2% and -15%, respectively.

In the six months ending 31 December, the company’s net sales experienced a 1% decrease to $8.42 billion.

Source: The Estée Lauder Companies. Click to enlarge.

Freda added: “Our performance this quarter gives us confidence, as we delivered strong sales and earnings growth amid the pandemic while living our company values and investing in technology for new capabilities to support accelerating growth drivers.

“We still expect to deliver sequentially improving sales growth each quarter for the remainder of fiscal 2021 as we continue driving recovery.”

Chinese influencer Yvonne Ching displays La Mer’s travel exclusive five-piece collection to celebrate Lunar New Year.

THE ARRIVE HYDRATED COLLECTION

In the third fiscal quarter 2021, reported net sales are forecast to increase between 13% and 14% versus the prior period.

Estée Lauder declined to offer specific sales and EPS guidance for fiscal full year 2021 ‘given the recent surge of Covid-19 infections globally and the uncertainty around the timing, speed and duration of the recovery’.

Separately, Estée Lauder has launched a new travel exclusive from La Mer.

The Arrive Hydrated Collection is a travel exclusive available in select airports, downtown, online duty free and duty paid stores for a limited time only.

The collection includes five skincare favourites: Rejuvenate (The Treatment Lotion Hydrating Mask); Revitalize (The Revitalizing Hydrating Serum); Regenerate (The Regenerating Serum); Refresh (The Eye Concentrate); and Renew (Crème de la Mer).

Customers can redeem a complimentary sample and gift with purchase by visiting participating duty free counters.

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