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As the New York-based beauty products giant reported a 50.6 percent rise in earnings for the fourth quarter, newly minted president and chief executive officer William Lauder told analysts during the company conference call that management believes its greatest opportunity for future growth lies in the hands of its hair care division, the firm’s youngest and smallest unit.
“We expect hair care and skin care to lead growth, followed by makeup and fragrance,” Lauder told analysts. “While hair care for us is still in its relative infancy, our professional salon brands, Aveda and Bumble and bumble, have made tremendous strides in developing and executing their growth strategies.”
While Lauder realigned the focus for future growth, he made clear that placing faith in the strength of the department store channel — a belief that many analysts have criticized as the company’s greatest risk — directly fueled gains for both its fourth-quarter and the year-end period.
“The recovery of U.S. department stores, particularly the high-end specialty retailers, along with better-than-expected recovery in travel retail, helped us to significantly exceed our plans,” said Lauder.
For the three months ended June 30, the firm saw earnings balloon 50.6 percent to $71.1 million, or 31 cents a diluted share, shy of Wall Street’s consensus estimate of 32 cents. Comparatively, the company reported earnings of $47.2 million, or 20 cents, in the year-ago period.
Sales rose 15.1 percent to $1.4 billion from $1.22 billion. Excluding the benefits of currency exchange sales rose 12 percent.
Skin care, makeup and fragrance paced sales for the quarter, with makeup sales narrowly keeping its spot as the top product category.
According to the company, makeup sales rose 10 percent in local currencies to $2.15 billion, while skin care products rose 8 percent in local currencies to reach $2.14 billion, marking the first time in the company’s history the two categories had exceeded the $2 billion mark.
The launches of Estée Lauder Beyond Paradise, Aramis Life, Clinique Simply and Tommy Jeans helped fragrance sales rise 10 percent in local currencies to $1.22 billion. However, the bulk of this growth was attributable to improved travel retail sales.