Though Q1 FY2017 Was Dampened By Macroeconomic Setbacks, Estee Lauder Has Its Eyes Set On Slow But Steady Growth
Estee Lauder’s Q1 FY2017 (fiscal year ends in June) results were released on November 2nd. The company’s net sales and EPS both grew by around 2% and 5% year-on-year, respectively (on a constant currency basis).The strongest performing brands for the quarter were some of its small and midsized luxury brands. It is noteworthy to mention here that Estee Lauder follows a trend of acquiring small and innovative brands and then expanding their reach and customer base. Recently, it acquired Becca Cosmetics which is known for its makeup products including foundations, primers, and highlighters. Estee Lauder witnessed significant success in the European markets, digital channels, specialty multi, and the travel retail channels. The growth was partly dampened by the bleak economic conditions in certain geographies. The other reasons for the company’s slow growth were the persistent setbacks in the U.S. mid-tier department stores due to lower traffic, economic slowdown in the Middle Eastern region, difficult comparison in France and Germany, and a persistent negative trend in Hong Kong. However, these challenges were already taken into account by the management and plans are afoot to slowly grow sales in order to fulfill the full fiscal year’s growth expectations. The company’s growth plans include taking advantage of its stronger products, regions and channels to boost further growth. It also has a robust growth plan for the upcoming holiday season along with a fresh set of products in the pipeline.
Guidance For FY2017
For the full fiscal 2017, Estee Lauder’s management expects net sales to grow by 6% to 7% year-on-year on a constant currency basis, while foreign currency translation is expected to dampen sales by less than 1% year-on-year. The net diluted earnings per share are expected to lie between $3.20 and $3.30.
Makeup And Fragrance Growth Is Expected To Rise
Digital Focus
The company’s sales through e-commerce and m-commerce continue to be strong, with the latter contributing to over 40% of online sales in the quarter. The sales from mobile devices rose by 23% y-o-y in Q1 FY2017. Estee Lauder has launched almost 100 new sites over the recent past especially for its international buyers.
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