Estée Lauder Smells Market Share Gains With New Launches

by Trefis Team
+4.46%
Upside
71.67
Market
74.87
Trefis
EL
Estee Lauder
Rate   |   votes   |   Share

Global makeup and skin care giant Estée Lauder (NYSE:EL) is expanding its Melville production facility in an effort to optimize the plant size and achieve better economies of scale. This decision is in line with the overall company strategy to streamline its operations to extract efficiencies and cut costs. The company reported revenues of about $10 billion in 2012 with an EBITDA margin of 22.4%. We estimate that the streamlining of operations would push margins higher.

The company had shut down its Oakland production facility earlier this year. The 148,000 square feet fragrance bottling plant was shut down in April, and its operations were merged with the company’s Melville plant. The company expects its Melville facility to be crucial for its overall growth strategy. [1] [2]

View our detailed analysis for Estée Lauder here

Plans To Tap Higher Market Share Through New Product Launches

New product launches are extremely important in the cosmetics and fragrance industry to maintain and expand market share due to fierce competition in the industry. Estée Lauder has been a pioneer in launching new product variants keeping in mind the changing needs of its clients. Below are some noteworthy launches that the company is planning this season.

Fragrance Division

With an estimated 4.6% market share, Estée Lauder’s fragrance division reported $1.28 billion of revenues last year, up 2.2% year-on-year. The company is launching two new fragrances this year to enhance its scents portfolio and improve market share. The first fragrance, branded “Modern Muse,” is described by the company as having a “lush floral woody” scent. The fragrance is expected to be launched in September and will be composed of two contrasting notes, jasmine and woods. [3] The second fragrance is a limited-edition brand, Pleasures Pop Eau de Parfum, specially crafted for the summer 2013 collection and has a fruity-floral fragrance. [4] The fragrance division accounted for over 13% of the company’s revenues in 2012. You can see how the new launches can benefit Estée Lauder’s fragrance market share by tweaking the interactive chart below.

Makeup Division

Estée Lauder has also launched a limited-edition Bronze Goddess Summer Collection which is inspired by the shades and color of the Caribbean. The name draws itself from the intense heat and tropical scents of the Caribbean. The collection consists of palettes of warm sultry shades and shimmering hues. The company also launched Limited Edition Pure Color Five Color Eyeshadow Palette in Batik Sun, Limited Edition Pure Color Liquid Eyeliner Duo in Black Sands and Limited Edition Pure Color Illuminating Powder Gelée in Heat Wave. [5]

The makeup division contributed about 38% to total company revenues in 2012, up 5.2% year-on-year. With these exciting new launches, we estimate the company to report strong revenue growth in the next earnings.

We have a $66 Trefis price estimate for Estée Lauder.

Submit a Post at Trefis Powered by Data and Interactive Charts Understand What Drives a Stock at Trefis

Notes:
  1. Estée Lauder to expand skin-care plant, May 2013 []
  2. Estée Lauder To Shut Down Oakland, N.J. Plant, Lay Off Workers, January 2013 []
  3. Estée Lauder to Release First Fragrance in 10 Years, May 2013 []
  4. Estée Lauder announces new limited-edition fragrance for Summer 2013, May 2013 []
  5. Estée Lauder Bronze Goddess Summer Collection, May 2013 []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!