With masks on and shoppers stuck at home, sluggish demand for makeup products smeared what would have otherwise been exceptional results for the Estée Lauder Company.
On May 3, the parent company of MAC and Bobbi Brown reported that net sales climbed 16 percent to $3.86 billion for its third quarter ended March 31, 2021. Although sales rose across most product categories, the cosmetic maker missed analyst estimates as its makeup segment slumped 11 percent to $1.02 billion, offsetting growth.
While the pandemic took its toll on foundation and lipsticks, the company’s skin care segment, which is more than double the size of makeup, surged 31 percent to $2.26 billion. Likewise, fragrance sales increased 30 percent to $454 million, signaling a shift in consumer preferences toward self-care.
As CEO Fabrizio Freda said, “Our growth engines of skin care and fragrance were incredibly powerful. Sales rose in every region, led by double-digit growth in Asia-Pacific, where many markets contributed and sales growth in mainland China accelerated.”
Specifically, Asia-Pacific jumped 35 percent in sales to $1.3 billion and mainland China enjoyed double-digit growth, led by “strength in skin care, an initial recovery in makeup, and an acceleration in fragrance growth.” This strong performance by the Asia-Pacific region, coupled with domestic travel in China, especially in Hainan, was more than enough to offset drops in the company’s global travel retail business, Estée Lauder stated.
By brand, Estée Lauder and Clinique both saw double-digit growth, fueled by Chinese consumers and continued loyalty for their hero products. For La Mer, Freda noted that increased interest from male consumers plus its “Journey to Renewal” campaign, which featured Chinese KOL Yvonne Ching and offered a travel-retail exclusive five-piece set for the Lunar New Year, helped boost performance. In the fragrance category, Jo Malone London took the crown thanks to holiday activations around Chinese New Year and Valentine’s Day.
Given these multiple engines of growth, the beauty giant is confident in its gradual recovery and expects net sales for the full fiscal year 2021 to increase between 11 to 12 percent versus the prior-year period.
“Impressively, we are investing in many compelling long-term growth drivers, including end-to-end innovation with a new center in Shanghai, state of the art manufacturing in Asia/Pacific, global online, and consumer analytics,” Freda said, adding: “We expect the momentum in our sales growth to build in the fourth quarter of fiscal 2021, not only from easing comparisons but also fundamental strength, as we drive recovery.”