Estée Lauder sees Q3 sales decline, despite growth in UK

The Estée Lauder Companies has reported a 12% decrease in sales to £2.9 billion ($3.75 billion) for the third quarter ending 31 March 2023, let down by overall skincare and makeup sales. 

Sales declined 24% in the EMEA region, but increased in the UK. This was driven by The Ordinary, Estée Lauder and Clinique.

Overall skincare sales dropped 20% to £1.5 billion ($1.9 billion), reflecting the slower than anticipated recovery of travel retail in Asia. Sales declined at La Mer, Estée Lauder and Dr Jart+, but were offset by growth from The Ordinary and MAC Cosmetics.

Makeup sales decreased 2% to £800 million ($1 billion), with declines from Estée Lauder, partially offset by growth from MAC Cosmetics, Clinique and Tom Ford Beauty.

However, fragrance sales grew 1% to £468 million ($585 million). This was helped by growth in every region, as well as the Tom Ford Beauty, Le Labo and Estée Lauder brands.

Haircare sales also increased 1% to £119 million ($149 million), reflecting growth from The Ordinary’s haircare products, partially offset by a decline from Aveda.

Outlook

The group expects organic net sales to return to growth in the fourth quarter, reflecting the continued momentum of post-pandemic recovery growth in nearly all markets. However, sales are anticipated to decrease between 12-10% for the full-year.

Fabrizio Freda, President and CEO of The Estée Lauder Companies, said: “In the context of a quarter which we anticipated to be challenging, we're pleased to have delivered the high-end of our outlook for the third quarter. Our developed and emerging markets grew strongly and exceeded our expectations to offset an even slower-than-expected recovery in Asia travel retail.

"While we work through the serious but we believe temporary headwinds facing Asia travel retail, we are encouraged by the strong momentum in the rest of our business. Indeed, consumer demand is robust for our diverse portfolio of brands in developed and emerging markets around the world, which drives our confidence in the long-term.

"What is more, we're thrilled to have acquired the Tom Ford brand and are optimistic about its promising growth opportunities.”

Last week, The Estée Lauder Companies completed its acquisition of Tom Ford, making it the sole owner of the brand and all its intellectual property. The $2.8 billion deal was previously announced in November last year.

As part of the acquisition, Estée Lauder will continue to manage Tom Ford's cosmetics and fragrance businesses. It has been creating beauty and fragrance for the Tom Ford brand since 2006 when the Texan designer branched out under his own name, having previously been Creative Director at Gucci and Yves Saint Laurent.