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China growth boost for Estée Lauder

Momentum in China helped boost fourth-quarter performance for beauty products giant Estée Lauder.

Overall net sales for the three months to the end of June were up 9 per cent year on year (11 per cent in constant currency) to US$2.89 billion for the group, while rising 5 per cent for the full year (7 per cent) to $11.82 billion.

Sales benefitted from new products and double-digit growth in several markets, particularly China. The company also had double-digit gains in its travel retail, online and specialty multi-channels.

Net earnings for the quarter were $229 million, compared with $94 million last year..

For the year, the company’s net sales reached $11.82 billion, up 5 per cent (7 per cent excluding currency exchange impact). Incremental sales from the acquisitions of Becca and Too Faced contributed about two points of sales growth.

In the Asia/Pacific, all markets recorded growth except Hong Kong. Higher sales in China reflected strong double-digit gains in most brands, with sharp contributions from Estée Lauder, La Mer and Mac.

Sales benefitted, in part, from targeted expanded consumer reach and reflected double-digit online sales growth in every brand, including the launch of Mac on Tmall in China. Sales in department stores posted strong gains, while freestanding stores generated double-digit growth.

Strong sales growth was generated in Japan, Korea and Taiwan. In Hong Kong, the company’s business continues to stabilise with a return to growth in the fourth quarter.

There was strong growth in the region for sales of the Tom Ford, Jo Malone, La Mer and Mac brands.
Operating income increased for Asia/Pacific, primarily because of increased sales in China, Japan, Korea and Taiwan. Results were more modest in Hong Kong and Indonesia.

President/CEO Fabrizio Freda describes the quarter’s performance as “outstanding”, rounding out another year of strong net sales and earnings growth.

“Our business accelerated in our online direct-to-consumer and retailer e-commerce sites, as well as in the travel retail and specialty multi-channels, and we built momentum in key geographies like China, aided by enhanced digital and social-media communications.

“Additionally, we began to further improve our organisational efficiency and effectiveness through our Leading Beauty Forward initiative. Importantly, we delivered this performance in the face of external global volatility and one of the biggest moments of change in our industry.”

Estée Lauder’s acquisitions of Becca and Too Faced performed ahead of plan, with incremental sales contributing about 3.5 points to sales growth.

Sales growth was posted in most brands, and there were across-the-board sales gains in all geographic regions and product categories, except hair care.

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