Estée Lauder third quarter net sales increase due to popularity of makeup and haircare brands

Estée Lauder third quarter net sales increase due to popularity of makeup and haircare brands

Estée Lauder net sales for its third quarter reached US$2.58bn, a 1 percent increase, compared with US$2.55bn posted during the same period last year.

The company posted a 200 basis-point increase in operating margin, and net earnings for the quarter rose 28% to $272.1 million, compared with $213.2 million last year.

Across product segments, makeup and haircare experienced strong sales growth, rising by 7 percent and 3 percent respectively. However, fragrance and skincare sales declined by 3 percent each. The dip has been attributed to the negative impact of foreign currency translation.

Fabrizio Freda, President and Chief Executive Officer, said, “We posted an excellent third-quarter performance, exceeding our constant currency sales forecast that, combined with disciplined expense management, we leveraged into sharply higher earnings per share. Compelling product innovations, targeted advertising and marketing investments and selective distribution expansion drove double-digit constant currency sales growth in many of our brands.”

In makeup, products driving sales included Beyond Perfecting foundation and concealer from Clinique, the Pure Color Envy line of lip products, and Perfectionist Youth-Infusing Makeup from Estée Lauder. Smashbox and Tom Ford cosmetics lines also registered double digit growth. The growing popularity of the company’s makeup artist brands was offset by lower results from heritage brands.

Haircare benefited from expanded global distribution, primarily in salons and freestanding stores for Aveda and from specialty-multi brand retailers and salons for Bumble and bumble. Net sales growth has also been attributed to the recent launches of Smooth Infusion Naturally Straight by Aveda and the expansion of Bumble and bumble’s Hairdresser’s Invisible Oil line of products.

To drive sales growth for the full year, Estée Lauder is increasingly focusing on its online and digital presence with the goal of boosting online sales by a total of 30 percent during 2015. The company has credited reality star and brand ambassador Kendall Jenner for helping to increase its makeup sales during the third quarter through her posts on social media, which have attracted younger customers to Estée Lauder brands.

In light of its latest financial results, the company has increased its estimate for constant currency net sales from 6 percent to 7 percent. However, it has reduced its profit estimate due to the negative impact of the strong dollar.

Geographically, on a constant currency basis, net sales increased at the highest rate at 8 percent in The Americas, rising from US$1,072.0m in the third quarter 2014 to US$1,109.9m during the same period in 2015. Net sales across Asia Pacific were up from US$518.4m to US$520.3m, an increase of 5 percent on a constant currency basis. Net sales across Europe, the Middle East and Africa decreased by 10 percent, down from US$959.4 to US$950.3m.