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For the first time in its history, Lauder’s sales in 2003 breached the $5 billion mark, increasing 7.9 percent to $5.12 billion from $4.74 billion.
The milestone was among a string of good news from Lauder Thursday as the company said it returned to profitability in the fourth quarter of 2003 versus a year ago and that it expects profit growth to continue in 2004.
Lauder generated profits of $53 million, or 20 cents a diluted share, for the three months ended June 30. The turnaround to profits happened despite a one-time pretax charge of $22 million, or $13.5 million aftertax, related to a pending settlement of a price-fixing lawsuit against it and other cosmetics makers and retailers.
The net profit reverses a year-ago quarterly loss of $25.4 million, or 13 cents, including restructuring charges of $117.4 million and an accounting charge of $20.6 million, or 8 cents. Excluding the special items, the firm’s earnings increased 29.1 percent to $66.5 million, or 26 cents a diluted share, versus income of $51.5 million, or 19 cents.
The growth reflects strong gross margin improvement, product innovation, gains in selling expenses and the benefit of restructuring in the prior year while at the same time increased investment in advertising, sampling and merchandising, the company said.
In addition, the firm said it achieved $35 million in restructuring benefits in 2003 and added $25 million in supply-chain cost savings.
“In 2003, we had success with great introductions supported with focused advertising,” Fred Langhammer, president and chief executive officer, said in a telephone interview Thursday. Going forward, he said the plan is to stay on course with advertising and promotions coupled with product innovation across all brands.
Langhammer said 30 percent of 2003 sales were generated from products introduced over the past three years. In addition, he said the U.S business climate is starting to improve as well as conditions in Asia and Europe.
It is that formula for success through the frequent introduction of new lines, plus the company’s solid fundamentals — a strong product lineup, distribution enhancements and more focused executions — that allow it to forecast higher profits and revenues in 2004.