Estée Lauder Cos (el) might be named for classic, high-end products, but the 72-year-old beauty company is proving deft at lining up brands that are drawing younger consumers.
The company on Friday reported quarterly sales for the period ended Dec. 31 rose 17% to $3.74 billion. And a significant chunk of that growth, 2 percentage points, came from two relatively recent additions to Estée Lauder Cos’ enormous portfolio: Too Faced and Becca. Those brands, snapped up by the New York-based beauty giant in late 2016, are exactly what Estée Lauder Cos needs as it looks to win over the next generation of beauty shoppers and continue its long streak of savvy acquisitions.
In December 2016, Estée Lauder Cos shelled out $1.45 billion for Too Faced, a playful brand beloved for its pretty packaging, in its biggest acquisition ever. That came soon after the company bought Becca. Both brands strengthen Estée Lauder Cos’ presence in specialty stores at a time when department stores continue to be a tough avenue for beauty companies.
Based on the strong performance of those and its other brands, which range from the namesake brand to Tom Ford Beauty, La Mer and Jo Malone, the company raised its current fiscal year forecast to an increase in sales of 12.5% to 13.5%, compared to a previous forecast of 10% to 11%. That compares to 5% for the industry as a whole. Shares rose 1.5% in mid-day training giving the company a staggering $50 billion stock market value.
The company again got big boosts from its big push in China, where Estée Lauder Cos was among the first Western brands to go beyond the very biggest cities, and its quick adaption to tech fueled online sales again.
Still, it’s the company’s dealmaking prowess that looks to help keep it ahead of competitors. Its 1994 acquisition of M.A.C., whose sales are still growing, is still paying dividends as is its purchase of Bobbi Brown a year later. Two years later it bought Aveda, another home run. More recently, it has snapped up Le Labo and Glamglow. With L’Oreal also proving to be acquisitive and successful in such deals, Estée Lauder Cos has to continue making M&A a priority. But its track record shows it knows how to pick ’em. Just look at Elizabeth Arden, now part of Revlon, to see what happens when a beauty company from yesteryear gets static. Eat or be eaten.