Skip to Content

Sales in Asia Lift Estee Lauder Growth and Outlook

General shots of civilians shopping beauty products at Estee Lauder counter at Sogo in Causeway Bay. 05MAY17 SCMP / Edward WongGeneral shots of civilians shopping beauty products at Estee Lauder counter at Sogo in Causeway Bay. 05MAY17 SCMP / Edward Wong
An Estée Lauder counter at Sogo in Causeway Bay, Hong Kong. A slowdown in China's luxury retail sales hasn't affected the cosmetic company's sales.South China Morning Post South China Morning Post via Get

On the back of booming sales in Asia, Estee Lauder on Wednesday raised their full-year guidance for the second time this year after growth exceeded expectations in the latest quarter.

“We had anticipated a gradual moderation of growth in China and travel retail starting in the quarter, which didn’t happen, and that contributed to our overachievement,” said Chief Executive Officer Fabrizio Freda, in a company statement.

In response to the strong results, Lauder shares rose to a record high in trading, as much as 4.9% in New York to $180.20, the highest intraday level since it went public in 1995. The stock had gained 32% this year through Tuesday’s close, outpacing the S&P 500.

For the company’s fiscal quarter ending March 31, 2019, net sales of $3.74 billion increased 11% from $3.37 billion from the same period a year ago, beating estimates. Lauder said net earnings rose to $555 million compared with $372 million last year.

The company said it posted net sales growth in nearly all product categories and channels.

Lauder now sees full-year adjusted earnings per share of $5.15 to $5.19, after profit. The company had already boosted its outlook for that metric in February.

Skincare sales are flourishing in Asia, and Estee Lauder’s high-end beauty labels such as La Mer are performing well despite wider worries of a luxury slowdown in China.

Meanwhile, Estee Lauder has been working to connect with younger shoppers in the U.S. by acquiring up-and-coming beauty brands and investing more in e-commerce. In recent years, the cosmetics giant has acquired numerous trendy brands, including Glamglow, Becca, and Too Faced.

Still, sales in the Americas slipped 2% in the quarter, even as Asia and Europe logged double-digit growth. However, in the United Kingdom Lauder experienced “lower results,” which “reflected reduced consumer confidence ahead of Brexit and lower traffic across brick-and-mortar stores.”

Estee Lauder recently bought three brands in what it calls the “ultra-prestige” fragrance category: Le Labo, Frederic Malle and By Kilian. Those brands drove the fragrance sector’s growth in the quarter, even as certain designer scents lost luster.

“Our strongest growth engines were the Asia/Pacific region, the skin care category, our Estee Lauder, La Mer and Tom Ford’s Beauty brands, and travel retail and global online channels,” Freda said.

Demand for artisanal fragrances also has accelerated as shoppers flock to Lauder’s upscale products, including Tom Ford’s Black Orchid scent.