Double-Digit Growth In China Spurs Estée Lauder’s Recovery

The cosmetics giant Estée Lauder released its 2020 fiscal year results on August 20, and the New York-based company reported net sales of $14.3 billion for its fiscal year, ending June 30, 2020, which was a 4-percent drop from $14.86 billion in the year prior. The company’s net earnings amounted to $680 million compared to $1.79 billion over the previous period. Estée Lauder owns La Mer, Tom Ford Beauty, and MAC, and it recently acquired the South Korean skincare brand Dr. Jart+.

“Fiscal 2020 was a year without parallel, as we delivered record sales and exceptionally strong adjusted EPS growth in our first half and navigated with agility through an unprecedented pandemic in our second half,” said the president and chief executive officer of Estée Lauder, Fabrizio Freda, in the earnings call.

The beauty company’s gradual recovery from COVID-19 was primarily due to China. On the Mainland, net sales grew by double-digits on every channel (led by online) and saw double-digit growth in every product category and with almost every brand. Online made up over 40 percent of Estée Lauder’s sales for the fiscal year, and growth in China was partially driven by successful programs during key shopping moments, like Singles’ Day and the 6.18 Mid-Year Shopping Festival — but also by targeted and expanded consumer reach. Despite the curtailed travel retail section, its domestic travel consumption in China remained stable.

Luxury skincare products performed well, among other categories. Double-digit growth from La Mer was also driven by the Asia/Pacific region (with strong sales in Mainland China) and by travel retail, thanks to booming hero products. Targeted marketing also contributed to La Mer’s growth. The effects of COVID-19 heavily impacted makeup, particularly for foundation and lip products, as sales remained soft in most markets.

Estée Lauder also announced its Post-COVID Business Acceleration Program, with strategic priorities for the 2021 fiscal year rightly balancing investments alongside cost discipline due to the ongoing pandemic. The company plans to lay off 1,500 to 2,000 employees and close 10-15 percent of its stores around the world. These two measures are expected to save the company $300 and $400 million, respectively, over the year, according to the company.


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