Following its acquisition of Becca Cosmetics, The Estée Lauder Companies Inc. has reported net sales of $2.87 billion for the first quarter of fiscal 2017, ended September 30, 2016, a 1% increase compared with $2.83 billion in the prior-year quarter. Net earnings were $294 million, compared with $309 million last year.
The company explained that its global prestige beauty sales are forecast to grow approximately 4% to 5% for full-year 2017.
The company will be investing in targeted consumer engagement for MAC and mid-sized brands.
“Our first quarter sales grew in line with our expectations, while disciplined expense management delivered earnings per share that exceeded our guidance," said Fabrizio Freda, president and CEO. "Our small to mid-sized brands were strong contributors to sales as were the travel retail channel and many developed and emerging markets."
Freda noted that the company has had issues, including declining retail traffic in U.S. mid-tier department stores, slow or slowing markets in Middle East and Hong Kong, and "difficult comparisons with the prior year in the United States and France."
The company will be investing in targeted consumer engagement for M•A•C and mid-sized brands. In addition, it will focus resources to the strong growth areas of makeup, fragrance and international markets.
Freda noted, “Our focus remains on delivering sustainable and profitable annual growth, and the many actions we have planned give us confidence to reaffirm our expectations for constant currency sales growth of 6% to 7% and earnings per share growth of 8% to 10%, before charges, for the 2017 fiscal year.”
Fragrance net sales increased as a result of prestige sales and brands like Jo Malone London (Basil & Neroli), Le Labo, By Kilian and Tom Ford (Soleil and Neroli Portofino).
Skin care sales fell slightly, but benefited from sales of La Mer, Origins (particularly face masks) and Aveda's Tulasara line. Weakness was experienced in Estée Lauder and Clinique and the Asia/Pacific region, particularly Hong Kong.
Makeup, on the other hand, increased slightly, driven by double-digit sales increases from Tom Ford (especially lip color) and Smashbox (particularly sales in specialty multi-brand retailers), and growth from Estée Lauder (Double Wear and Pure Color Envy) and Clinique (Superbalanced). Makeup is a strong category industry-wide, but Estee Lauder's results were boosted by new launches and broadening channels, including travel retail and specialty-multi brand retailers. As noted, M•A•C's sales were negatively impacted by lower North American sales and lower store traffic in mid-tier department stores.
Fragrance net sales increased as a result of prestige sales and brands like Jo Malone London (Basil & Neroli), Le Labo, By Kilian and Tom Ford (Soleil and Neroli Portofino). Sales were offset by declining desinger fragrance sales.
Hair care net sales rose, driven by Bumble and bumble and offset by Aveda.