The coronavirus is still impacting the financial results of the Estée Lauder Cos., but the numbers this quarter were “stronger than expected,” said Fabrizio Freda.
Net sales for the quarter ending Sept. 30 declined 9 percent to $3.56 billion, from $3.9 billion in the prior-year period. Net earnings were $525 million, down 12 percent year-over-year from $595 million.
Bright spots included skin care, sales across the Asia Pacific region, and e-commerce, the company said. Travel retail remains severely impacted by travel limitations around COVID-19, and Lauder saw declines across all makeup brands except Too Faced.
“We are pleased with the stronger than expected start to our fiscal year amid this difficult moment as the global community continues to confront COVID-19,” Freda said in a statement.
Sales were driven by innovation, Freda noted, which accounted for more than 30 percent of sales in the quarter, and the online channel “thrived” globally, he said.
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Freda said that the company expects to deliver better sales figures sequentially through the upcoming quarters.
While most of Lauder’s points of sale were open during the quarter, certain regions including the U.K., Ireland and other countries in Europe have renewed government restrictions aimed at preventing the further spread of COVID-19, the company noted.
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Geographically, the Americas were the hardest hit region during the quarter, with sales down 25 percent year-over-year to $873 million. Europe, the Middle East and Africa saw an 8 percent sales dip, to $1.5 billion, and Asia/Pacific posted a 9 percent gain to $1.1 billion. “Travel retail was a stand-out performer as Chinese tourists were drawn to the growing duty-free shops in Hainan Island and purchase limits increased there,” Freda said.
Skin care sales were up 10 percent, to more than $2 billion in the quarter, from $1.8 billion in the prior-year period. That growth was helped by the recent acquisition Dr. Jart+, which contributed 6 percent to skin care growth. La Mer and Estée Lauder also saw strong sales, especially in China.
Makeup sales slumped 32 percent, to $978 million from $1.4 billion. Lauder said COVID-19 has disproportionately affected makeup, especially categories like foundation and lip.
Fragrance sales declined 12 percent, to $406 million from $462 million. Many of the major brands — Estée Lauder, Clinique, designer fragrances, Jo Malone London and Tom Ford — saw dips. But niche brands, including Le Labo, Kilian Paris and Editions de Parfums Frédéric Malle, grew in the quarter.
Hair care sales were flat, at $136 million. Aveda sales increased, while Bumble and bumble sales decreased.