THE WHAT? The Estee Lauder Companies has announced its results for the third quarter of fiscal 2020. The US prestige beauty giant saw sales drop 11 percent year-on-year in the three months to March 31, 2020, to US$3.74 billion.
THE DETAILS The US$555 million in net earnings reported this time last year was transformed into the US$6 million loss and no product category was exempt, although skin care was the most resilient category losing a modest 1 percent, thanks to the company’s acquisition of Dr Jart+, compared to make-up where sales plummeted 22 percent.
In terms of regions, the Americas suffered the biggest impact, with sales slumping 23 percent while Asia saw a dip of 4 percent and Europe, the Middle East and Asia dropped 6 percent.
Fabrizio Freda, President and Chief Executive Officer said, “While the terrific double-digit momentum in sales growth from the first half of our fiscal year carried into January, the dynamics in the quarter changed significantly as COVID-19 spread beyond Asia. By early March, consumers around the world began social distancing which resulted in lower traffic in retail locations. As March evolved, most retail stores temporarily closed and consumers increasingly stayed home. In this very complex and unprecedented environment, there were several bright spots across our portfolio which drove global prestige beauty share expansion in the quarter. The Estée Lauder, Darphin, and Le Labo brands grew, global online sales rose strong double-digits, sales in mainland China and global travel retail increased, and skin care sales grew internationally, including Dr. Jart+. The surge in our online business worldwide, coupled with the recovery we are seeing emerge in China, confirm consumers’ passion for our prestige beauty portfolio.
“In light of ongoing temporary store closures in many regions, we have begun to adjust our cost structure and have enhanced our liquidity during this challenging time. We remain focused on our proven strategy built on multiple engines of growth and the desirability of our brands and their hero franchises. Our diverse portfolio of categories, channels and geographies affords us the needed agility to navigate through this environment and emerge strongly. We stand ready to leverage the recovery when stores reopen and consumers restock at home.”
THE WHY? The net sales decline, says Lauder, was driven by retail store closures as a result of the global spread of COVID-19.