Where Will Estee Lauder’s Future Growth Come From?

by Trefis Team
Estee Lauder
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Estee Lauder’s (NYSE: EL) revenue has continued with its growth momentum over the years, primarily driven by strong performance in its Skin care and Makeup segments. Estee Lauder recently reported better-than-expected growth in sales for FY2018, growing by 16% y-o-y.

Estee Lauder’s Skin Care segment, which constitutes over one-third of Estee Lauder’s sales, posted 24% growth in FY 2018 sales. 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. The division is continuing to perform well in e-commerce and is outpacing growth in the mass Skin care segment.

EL’s makeup segment continued to see increased sales from the acquisitions of Too Faced and BECCA of the last fiscal year. 11% increase in this segment was driven by strong growth from its brands viz. Estée Lauder and Tom Ford, Too Faced, BECCA, and La Mer.  Other sources of revenue for EL are the Fragrance segment that increased 12%, primarily due to strong double-digit gains across all geographic regions from luxury brands, and the Hair care segment which increased by 6% primarily due to the successful launch of new Aveda products.

Driven by this FY2018 performance, which has been fueled by growth in most of their segments and brands, Estee Lauder is projecting 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. EL’s growth drivers and aggressive growth strategies will help it in maintaining its dominance in the beauty market. Also, the company is on track with the implementation of the Leading Beauty Forward initiative, directed toward better-management of costs and operations, which will help it grow stronger in the coming years.

We have created an interactive dashboard What Are Estee Lauder’s Key Sources of Revenues that shows Estee Lauder’s key revenue sources and the expected performance in 2019. You can adjust the revenues to see the impact on earnings.


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