Estée Lauder reports uneven Q2 financials across the Americas region

06-Feb-2017 - Last updated on 06-Feb-2017 at 14:37 GMT

Many brands saw a sales increase in North America; the lift in Latin America was not as significant, while in Canada, sales were flat. Globally, skin care and fragrance did well. Hair care did not.

Estée Lauder reported Q2 net sales of $3.21bn, a figure that’s up 3% from $3.12bn in the same quarter the previous year. Net earnings for the quarter were down. For Q2 2016, Estée Lauder reported $447m in net earnings and reported this year’s Q2 net earnings at $428m.

“Our second quarter sales growth accelerated as planned, reflecting the benefits of our portfolio diversity by brand, channel, product category and country,” Fabrizio Freda, president and CEO of Estée Lauder, says in a company press release announcing the quarterly results, adding that “our small, mid-sized and luxury brands continued to lead growth, contributing strong sales increases, and recent acquisitions added incremental sales.” (Read Cosmetics Design coverage of the company’s acquisition of Too Faced and BECCA.)

Location, location, location

Business in Canada was unremarkable for Estée Lauder this past quarter. In Latin America, the company reports a sales increase in the low single digits.

In the Americas, most brands saw sales go up. For the Estée Lauder brand that was a low single-digit lift. For each of the Tom Ford, La Mer, and Smashbox brands, the company reports a double-digit lift.

In business today, location isn’t necessarily geographical. Estée Lauder’s online sales for the quarter grew by “strong double-digits.” Likewise travel skin care saw double-digit growth too.

Good, better, best

Skin care sales were up 1% compared to the same quarter last year: $1,232m compared to $1,248m in this year’s Q2.

Makeup saw a 4% sales lift. The previous Q2 figure was $1,251m. The quarter that just ended, on December 31, 2016, came in at $1,306m.

Fragrance sales rose by 6% year-over-year, “primarily due to strong double-digit gains from luxury brands Jo Malone London, Tom Ford, Le Labo and Frédéric Malle, and incremental sales from By Kilian,” according to the press release. New launches often do well for any category. In fragrance Estée Lauder, attributes the lift in Jo Malone sales to the brand’s launch of Basil & Neroli.

Room for improvement

The company is already looking to recover from a reported 8% decrease in hair care sales this quarter. Estée Lauder attributes the drop in sales (and, by extension, operating income in the category) “to a difficult comparison with several Aveda product launches in the prior year.”

Estée Lauder is looking to that same brand to turn the hair category around. Before the fiscal years is out, Aveda “plans to launch hair care initiatives,” according to the release.

Going forward, Freda anticipates “sales and profit growth to further accelerate in the second half of our fiscal year, due largely to strong product innovation, increased consumer coverage and improving trends in certain brands and markets. We plan to make targeted investments throughout the balance of the fiscal year to support and grow our brands”