What Are Estee Lauder’s Key Sources Of Revenue?

by Trefis Team
Estee Lauder
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Estee Lauder (NYSE: EL) has continued with its growth momentum the past few years, primarily driven by strong performance in its Skin Care and Makeup segments. Its Skin Care and Makeup Divisions account for 80% of the company’s revenue. Recently, during the Q2 earnings for FY19, the company reported better-than-expected growth in sales growing by 11% y-o-y.

Estee Lauder’s Skin Care segment, which constitutes over one-third of Estee Lauder’s sales, posted 16% growth in Q2 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 in the last fiscal year. The 3% 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 is the Hair Care segment, which increased by 5% primarily driven by higher sales of the Aveda brand and continued growth from the Invati Advanced line of products.

Driven by this earning performance, which has been fueled by growth in most of their segments and brands, Estee Lauder is projecting growth in its Q3 2019 sales to increase between the band of 8% – 9% (Excluding a 5% impact from currency translation and a 2% impact from the adoption of ASC 606), net earnings per share between $1.17 and $1.20. 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 on 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. In addition, all Trefis Consumer Discretionary Data is here.



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