Estée Lauder (NYSE:EL) will be reporting its third quarter results on May 2 after a strong performance during last quarter when the company delivered 7% growth in revenues year-on-year. Net sales stood at $2.9 billion, supported by 11% revenue growth in Asia-Pacific region, especially China, Hong Kong and Taiwan. Much of this growth can be attributed to expanded reach of the company’s products and successful product launches.
The company recorded 6% growth in revenues in the Americas, Europe, the Middle East and Africa, which together constitute more than three-fourths of the overall revenues. The growth was driven by increased promotional activities undertaken by the company for its heritage and prestige brands in these areas. See our complete analysis of Estée Lauder’s second quarter results here.
Estée Lauder also witnessed accelerated orders from some of its retailers during the last quarter as the company is in process of implementing SAP-based technologies, as a part of its modernization initiative. Retailers increased their present orders to provide adequate safety stock to mitigate any potential short term business interruption associated with the SAP rollout. The company attributes revenues of $94 million to such accelerated orders, and we estimate this to slow the pace of growth in third quarter results. 
- Who Relies More On Debt: L’Oreal Or Estee Lauder?
- How Can The Current Surge In Demand For Premium Beauty Boost Estee Lauder in 2016?
- How Does Estee Lauder’s Financial State Currently Look?
- Here’s How Estee Lauder Plans To Grow In China
- Estee Lauder’s Expected Revenue And EBITDA Growth For 2016: Trefis Estimate
- How Did The Bottom Lines Fare Over The Last 5 Years For The Top Beauty Companies ?
Higher Penetration Of Digital Technology To Boost Revenues
Estée Lauder has adopted a multi-pronged digital strategy encompassing e-commerce, m-commerce, as well as digital and social media to support its existing distribution networks for generating higher revenues. This is a part of the company’s “High Touch” service model through which it aims at providing consumers a one-to-one customized experience, offering outstanding personalized service and education so as to quickly identify consumer requirements and reduce the time taken to innovate and develop new products.
These digital platforms contribute a major share to Estée Lauder’s overall revenues. E-commerce was the fastest-growing distribution channel in North America during the last quarter when it grew by double digits. On Cyber Monday, the Monday after Thanksgiving, online sales were 17% higher than the previous year.  The company’s online initiative in China has already earned it the top ranking in Digital IQ Index for the China beauty market.  We expect these initiatives to support the company’s revenues in this quarter.
Enhanced Focus On Skin care And Hair Care Divisions To Drive Results
The skin care and hair care divisions recorded 10% and 9% growth respectively during the last quarter. We estimate that the skin care division constitutes more than 50% of the company’s stock value.
The skin care division continues to be a strategic focus for the company as is evident by the recent launches of Perfectionist CP+R, Advanced Time Zone, Advanced Night Recovery Eye Serum Infusion and the Optimizer line of products from Estée Lauder, Even Better Eyes Dark Circle Corrector from Clinique and The Moisturizing Soft Cream from La Mer. Similarly, under the hair care division Estée Lauder has launched Pure Abundance Style Prep and Be Curly Curl Controller from Aveda. We estimate the new launches to contribute significantly to this quarter’s revenue growth.
We will update our $66 Trefis price estimate for Estée Lauder after the company files its financials with the SEC.Notes: