The Estée Lauder Companies has reported "outstanding financial results" today, for its first quarter ended September 30, 2019.

Net sales of $3.90 billion increased 11% from $3.52 billion in the prior-year period. Excluding the impact of currency translation, net sales increased 12%.

Net earnings rose 19% to $595 million, compared with $500 million last year. Diluted net earnings per common share increased 21% to $1.61, compared with $1.34 reported in the prior-year period. Adjusted diluted earnings per common share, which excludes items detailed below, rose 19% to $1.67, or grew 20% in constant currency.

Total reported operating income was $779 million, a 19% increase from $652 million in the prior year. Operating income increased 20% excluding the unfavorable impact of currency translation of $4 million and restructuring and other charges and adjustments of $25 million, compared to $36 million in the prior-year period. This largely reflected higher net sales and disciplined cost management throughout the business while increasing advertising investment.

A Statement from Fabrizio Freda

Fabrizio Freda, President and Chief Executive Officer comments:

“We have started fiscal year 2020 with terrific results. Our winning strategy based on multiple engines of growth helped us deliver an extraordinary performance, especially in light of the volatile global environment, reflecting the agility and resiliency we have created in our business model."

“Our sales growth was led by excellent results from our international markets, particularly in China and our other emerging markets, the skin care category, the travel retail and online channels globally, our Estée Lauder brand and several luxury brands, all of which grew double digits. In addition, all four of our biggest brands, each with annual sales well over $1 billion, grew globally. This demonstrates the enduring consumer interest in established brands and their proven, desirable products."

“Improved data analytics and consumer insights fueled our successful innovations and digital marketing, and our hero franchises continued to power our portfolio. We broadened our growth engines, activated new ones and invested in the best opportunities across our global strategic priorities.”

“By leveraging our sales gains and maintaining a disciplined operational and financial focus, adjusted diluted earnings per share rose significantly. At the same time, we increased our advertising spending. With this strong start and continued confidence in our ability to execute effectively, we are raising our full year net sales and EPS guidance in constant currency.”

Skin Care

Skin care net sales grew across all regions, led by Estée Lauder and La Mer. Clinique and Origins also grew globally.

The Estée Lauder brand delivered double-digit growth in all regions, reflecting continued strength in certain of its core products, such as Advanced Night Repair, Micro Essence and Revitalizing Supreme, supported by successful innovations, including the launch of Advanced Night Repair Intense Reset Concentrate.

Double-digit growth at La Mer was broad based, with net sales increasing across every region and major channel. Growth was driven by higher net sales of existing products, including The Treatment Lotion and The Concentrate, as well as the relaunch of The Regenerating Serum.

Clinique’s growth was driven by increases in its hero moisturizers, including Moisture Surge, the Dramatically Different Moisturizing franchise and Smart Clinical, which drove growth in North America and travel retail.

Makeup

Net sales growth in makeup was primarily driven by increases from Estée Lauder, MAC, Tom Ford Beauty and La Mer. Estée Lauder generated solid double-digit growth, driven by strength from its Double Wear line of products.

MAC’s growth was led by double-digit sales increases in Greater China, Japan, Southeast Asia and Latin America, as well as targeted expanded consumer reach that supported strong growth in travel retail and online. The brand's sales from innovation grew mid-single digits, led by several new lip and foundation launches.

Net sales from Tom Ford Beauty increased double digits, primarily driven by its lip color, eye shadow and cushion compact products in Asia/Pacific, as well as targeted expanded consumer reach, including the brand’s highly successful launch on Tmall this quarter.

These increases were partially offset by lower net sales from Too Faced, BECCA and Clinique.

Makeup operating income declined, primarily reflecting lower net sales from Too Faced, Bobbi Brown and BECCA, as well as planned investments to support new product launches.

Fragrance & Hair

Net sales decreased slightly in constant currency, as growth at Jo Malone London and Tom Ford Beauty was offset by lower net sales of certain designer fragrances. Additionally, the Estée Lauder brand had a difficult comparison due to the launch of Beautiful Belle in the prior-year period.

Jo Malone London’s net sales increase primarily reflected growth in hero products and franchises as well as the launch of Poppy & Barley and targeted expanded consumer reach.
Increased net sales from Tom Ford Beauty reflected the continued success of certain Private Blend fragrances and the launch of Metallique.

Hair care net sales declined, reflecting lower net sales from Bumble and bumble, primarily in North American salon and specialty-multi channels, and difficult comparisons at Aveda, due to the successful launch of Cherry Almond Softening Shampoo and Conditioner in the prior-year period. Hair care operating income declined, reflecting the lower net sales.

Outlook for Fiscal 2020 Second Quarter and Full Year

The Company continues to see strong consumer demand for its products, and for the fiscal year expects to grow ahead of the industry and to continue building global share.

The Company expects global prestige beauty to grow approximately 5-6% during the fiscal year.