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Lauder 2003 Sales Reach $5B

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.

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William Steele, an analyst with Banc Of America Securities, described Lauder’s fourth quarter as “solid” and said he is expecting continued strength. “Clearly they are investing behind their brand, launching new products, expanding margins and increasing earnings, which are all good things from an investment perspective. They are making solid progress and investing a majority back into the brand, which is helping to drive the 8 percent sales increase.”

Skin care, hair care and makeup lifted the company’s quarterly net sales 8.3 percent to $1.22 billion from $1.13 billion in the fourth quarter. Excluding the impact of foreign currency translation, sales increased 3 percent in the quarter.

“I am pleased our solid second-half results capped off a strong annual performance,” Langhammer said on a morning conference call. “We have seen momentum increase throughout the year, as our brand-building investment strategies and cost-saving initiatives came to fruition. Sales grew in all geographic regions and product categories despite uncertainty around the world.”

For 2003, Lauder delivered earnings toward the high end of guidance, with profits of $319.8 million, or $1.26 a diluted share, a 66.6 percent increase when compared with income in 2002 of $191.9 million, or 70 cents.

In a breakdown of its revenues, Lauder said sales of skin care products for the year increased 11 percent to $1.89 billion on a reported basis and rose 7 percent before foreign currency translations. The higher sales reflect the launches of the Repairwear treatment collection and Advanced Stop Signs by Clinique. Makeup sales for the year rose 7 percent to $1.91 billion in dollar terms and increased 4 percent in local currency. In addition to solid growth from its makeup artist brands, the higher sales reflect the launches of Colour Surge Lipstick and Dewy Smooth Anti-Aging Makeup SPF 15 from Clinique, MagnaScopic Maximum Volume Mascara, So Ingenious Multi-Dimension Liquid Foundation and Loose Powder and new and existing products in the Pure Color lip and nail line by EL.

Fragrance sales on a reported basis increased 4 percent to $1.06 billion and were flat in constant currency terms. The increase reflects solid growth from the travel retail business. Hair care product sales rose 6 percent to $228.9 million, resulting from increases at Aveda and Bumble and bumble.
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