Estée Lauder sales rise thanks to 'strong' skincare growth

The Estée Lauder Companies has reported a 5% increase in net sales to £3.15 billion ($3.94 billion) for the third quarter ending March 31, 2024, supported by growth across all product categories, except haircare. 

The company saw organic net sales increase 6%, primarily due to double-digit growth in Europe, the Middle East and Africa (EMEA), driven by "stronger" sales in Asia travel retail.

Overall skincare sales lifted 9%, with growth from La Mer and Estée Lauder boosted by continued strength from hero products.

Makeup sales increased 4%, benefiting from growth in the company’s travel retail business, partially offset by previous changes made to MAC Cosmetics' take-back loyalty programme.

Estée Lauder grew double digits, reflecting the continued success of its Double Wear product franchise, while Clinique benefitted from strength across the eye, face and lip subcategories.

Fragrance grew 1%, with sales at the company’s luxury brands such as Jo Malone London and Le Labo up, partially offset by a decline from Estée Lauder due to "softer retail sales during holiday and key shopping moments that led to lower shipments for replenishment orders compared to the prior-year period".

Haircare sales dropped 4%, primarily due to Aveda reflecting softness in the company’s North American salon channel.

The Estée Lauder Companies reported net earnings of £264 million ($330 million), compared to £125 million ($156 million) in the prior-year period.

Looking ahead, the company said it remains focused on re-establishing sustainable, profitable long-term growth across regions, product categories, brands and channels.

Net sales are expected to lift between 5-9% in the fourth quarter against the previous year, with organic net sales up 6-10%.

Fabrizio Freda, President and CEO of the Estée Lauder Companies, said: "For the third quarter of fiscal 2024, we delivered our organic sales outlook, exceeded expectations for profitability and continued to improve working capital.

"La Mer, Estée Lauder, Jo Malone London, Le Labo, and The Ordinary led organic sales growth, driven by beloved hero products and highly sought innovation. Asia travel retail returned to organic sales growth, as developed and emerging markets across Asia/Pacific, EMEA, and Latin America further contributed.

"We have also made progress across all work streams for the Profit Recovery Plan, setting the stage to deliver its $1.1-1.4 billion of incremental operating profit in fiscal years 2025 and 2026 while also generating funds to reinvest into our brands and consumer-facing initiatives to accelerate sustainable sales and profit growth as a faster and leaner organisation."

The company's Profit Recovery Plan hopes to rebuild "stronger, more sustainable" profitability, support sales growth acceleration and increase speed and agility.

The plan is designed to improve gross margin, lower the cost base, and reduce overhead expenses, while increasing investments in key consumer-facing activities.