Here’s Why Estee Lauder Decided To Acquire Too Faced–the U.S. Based Fast Growing Makeup Brand
- Makeup is an important growth driver for the company. Estee Lauder’s fiscal 2016 (year ends in June) results reflected that net sales of makeup reached close to $5 billion with a 9% year-on-year growth. In comparison, its skincare segment didn’t display any growth for the fiscal year 2016.
- Earlier this month, Estee Lauder’s Q1 FY2017 earnings results revealed that one of the reasons for the company’s slow growth was its weak demand in the U.S. mid-tier department stores. This has increased the importance of adding brands that have a strong customer base in the alternative distribution channels. Too Faced derives almost 83% of its revenues from North America and is presently among the top 8 makeup brands in the specialty multi-channels in the U.S.
- Too Faced’s growth story so far had been hugely impressive. It has displayed a CAGR of 60% over the last three years and its net sales are expected to be around $270 million in 2016 reflecting over 70% year-on-year growth.
- Estee Lauder is aggressively targeting the millennial beauty users and Too faced will help in this endeavor. Too Faced offers an innovative line of cosmetics products with unique packagings for eyes, lips, and face. Millennials tend to feel authentically connected to its products and hence it has a huge fandom among this segment with over 7 million Instagram followers.
- Estee Lauder plans on expanding Too Faced’s reach through its own global presence. Estee Lauder’s management is confident about the massive growth potential of the brand. It plans on increasing Too Faced’s presence within and outside of the U.S. as well as through the travel retail channels.
- According to our estimates, Estee Lauder currently enjoys around 12% share of the global makeup market which is expected to exceed 13% by the end of our forecast period. Smashbox and MAC are some of its best selling brands in this category, so far. Brands like Too Faced and Becca might help grow the company’s global makeup market share with their unique and diverse range of products, popularity among the younger beauty users, and a strong presence in the digital sales channels.
Editor’s Note: We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly, alternative analyses you want to see. Drop us a line at content@trefis.com
Have more questions about Estee Lauder? See the links below.
- What Is Estee Lauder’s Revenue And EBITDA Breakdown?
- What Is Estee Lauder’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
- How Has Estee Lauder’s Revenue And EBITDA Composition Changed Over 2012-2016E?
- What Is Estee Lauder’s Fundamental Value Based On 2016 Estimated Numbers?
- What Drove Estee Lauder’s Revenue And EBITDA Growth Over The Last Five Years?
- Where Can Estee Lauder’s Growth Come From In The Next 5 Years?
- Estee Lauder Q3 FY16 Pre-Earnings Report
- How Did The Top Two Beauty Companies Perform In The Hair Care Segment Over The Last Five Years?
- How Does Estee Lauder’s Financial State Currently Look?
- Who Relies More On Debt: L’Oreal Or Estee Lauder?
- What Are Some Of The Trends Expected To Drive The Future Of The Beauty Market?
- Estee Lauder Braved Numerous Challenges To Deliver Growth Above That Of The Prestige Beauty Market
- What’s Next For Estée Lauder Stock After 10% Gains Post Q2 Results?
- What’s Next For Estee Lauder Stock After A 19% Fall Yesterday?
- Will Estee Lauder Stock Rebound To Its Pre-Inflation Shock Highs?
- Cross-Sector Comparison: Is Estee Lauder A Better Pick Over LLY Stock?
- What’s Next For Estee Lauder Stock After A 17% Fall In A Month?
- Should You Buy Estee Lauder Stock After A 36% Decline Since 2021?
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)