Estée Lauder annual sales hit by Asia travel retail market
The Estée Lauder Companies has reported a 10% drop in net sales to £12.5 billion ($15.91 billion) for the year ending 30 June 2023 - reflecting challenges in Asia travel retail, including the slower than anticipated recovery from the pandemic.
The company's skincare sales fell 14%, with declines from Estée Lauder, La Mer and Dr.Jart+ partially offset by "strong" growth from The Ordinary, MAC Cosmetics and Bobbi Brown.
Makeup sales remained flat against the previous year, with growth from MAC Cosmetics and Clinique offset by the declines at Estée Lauder, Tom Ford and La Mer.
Fragrance sales increased 14%, reflecting double-digit growth across every region and led by Tom Ford, Estée Lauder and Le Labo.
Haircare sales lifted 6%, boosted by Aveda and The Ordinary.
Total operating income reached £1.1 billion ($1.51 billion), a decrease from £2.4 billion ($3.17 billion) the previous year, due to lower net sales and higher cost of sales.
Looking ahead, the Estée Lauder Companies expects net sales for FY24 to increase between 5% and 7%.
Fabrizio Freda, President and CEO of the Estée Lauder Companies, said: "For FY23, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in Skin Care, and we continued to experience softness in North America.
"For FY24, we expect to return to organic sales growth and deliver sequentially improving margin throughout the year, leveraging the strong equity and desirability of our brands.
"We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America. In Asia travel retail, we are taking actions to capture demand from the returning individual travelers and continuing to reduce inventories in the trade as we navigate the current market headwinds.
"In this new fiscal year, we also intend to set the stage for a stronger FY25 acceleration, with a very robust innovation pipeline planned across the two years and progressive margin rebuilding plans."