Strong Brand Performance By Estee Lauder in Q4 Results

by Trefis Team
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Estee Lauder
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Estee Lauder (NYSE: EL) continued with its growth momentum in Q4 2018 reporting a 14% jump in sales to $3.30 billion from $2.89 billion in the same period last year and diluted net earnings per common share increased 20% to $.61. The company’s earnings were driven by strong performance in the skin care segment, growth from online and travel retail segments, and emerging markets particularly Asia (China). The performance this quarter reflected robust global demand across their portfolio, with virtually all their brands posting sales growth. Each of its three biggest brands grew globally, with exceptional growth in Estée Lauder.

Driven by this Q4 performance, Estee Lauder has forecast growth in its full fiscal 2019 sales to increase between the band of 7% – 8% with net earnings per share between $4.62 and $4.71. Please refer to our dashboard Key Takeaways from Estee Lauder’s Q4 results.

Skincare segment drives top line with 29% y-o-y growth

The skin care segment, which constitutes over one-third of Estee Lauder’s sales, posted 29% growth in sales in the fourth quarter. The company posted this exceptional performance driven by strong innovations, increasing demand from younger consumers, and gains from its hero products: Estée Lauder, La Mer, Origins, and Clinique brands.

Driven by continued success of the recent launches — Advanced Night Repair Eye Concentrate Matrix — the Estee Lauder brand saw strong growth from China and the travel retail segment. La Mer saw growth coming from new products in the Genaissance collection and launch of The Moisturizing Matte Lotion. In addition, Origins generated sales growth from every geographic region, led by Asia.

Makeup segment saw 4% jump in sales

The makeup segment of the company continued to see increased sales from the acquisitions of Too Faced and BECCA of the last fiscal year. Double-digit increases were driven by strong double-digit increases from Estée Lauder and Tom Ford,  Too Faced, BECCA, and La Mer. Net sales for the Fragrance segment also increased 11%, primarily due to strong double-digit gains across all geographic regions from luxury brands. Hair care segment also increased by 8% primarily due to the successful launch of new Aveda products.

Asia-Pacific region leads sales increase

Geographically, sales from the Asia-Pacific region led top line growth by rising 29%. Europe, Middle-East and Africa also saw sales rise by 19%. Sales from the Americas saw more modest growth at 2%. We anticipate rising disposable incomes in the emerging markets of Asia-Pacific to continue to boost sales growth from the Asia-Pacific region as it constitutes a growing share of Estee Lauder’s top line.

Outlook for the full fiscal 2019

The company forecasts the full fiscal 2019 sales to rise between 7% to 8% (excluding currency translation and impact from the adoption of the new revenue recognition) versus the prior-year period, reflecting the strong momentum behind the company from solid performance in 2018. The continued emphasis on a digital-first approach and on fast-growing markets and channels is also expected to contribute to this growth.

 

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