High end brands boost Estée Lauder’s third quarter profits

High end brands boost Estée Lauder’s third quarter profits

Premium brands such as MAC, Origins and La Mer have positively impacted Estee Lauder’s third quarter results, with the beauty giant posting a 36 percent increase in profit to $309.3 million in the three months ending September 2015.

The luxury brands sector rose 8 percent in the same period on an organic basis, excluding the impact of acquisitions divestitures, and currency moves. Meanwhile net sales increased 8 percent to $2.8 billion to the comparable period in 2014. However, this was lower than the expected 15 percent increase, with the shortfall attributed to many foreign currencies weakening against the US dollar.

It’s thought that the premium sector helped the brand’s positive sales results while other mass market companies have fallen by the wayside in recent years. This is thought to be due to a growing middle class worldwide creating more consumers to purchase higher priced products.

However, it wasn’t all good news for the company. While sales in Asia Pacific were down 4 percent to $549.6 million overall, sales in China and Hong Kong were lower due to a softness in the Chinese economy.

Fabrizio Freda, Estée Lauder’s Chief Executive, said, “I believe this is a short-term issue.” Concluding that Chinese shoppers and travelers will be “a big source of growth” for the company in the long run.

The company’s Clinique brand has also been hit due to lower footfall in department stores. Therefore the company is putting a focus on reviving the brand by drawing more consumers into the stores. The company has no plans to expand Clinique to mass market outlets such as drug stores.

 

 

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