Estée Lauder withdraws full-year outlook as first quarter sales decline

The Estée Lauder Companies has reported a 4% decrease in net sales to £2.58 billion ($3.36 billion) for the first quarter ending 30 September 2024, revealing single-digit declines across all beauty categories. 

The company's performance primarily reflects further softness in overall prestige beauty in mainland China.

Net sales grew low-single-digits collectively in EMEA, driven by the success of hero products and new innovation in skincare, which fuelled double-digit online growth.

Skincare

Overall skincare sales decreased 8% during the year, attributed to the ongoing softness in overall prestige beauty in mainland China. The category’s performance was driven by double-digit declines from La Mer and Estée Lauder, primarily due to the aforementioned challenges.

Makeup

Makeup sales dropped 2%. This was led by MAC Cosmetics and Too Faced, partially offset by Clinique, which saw sales grow double-digits globally, benefiting from the strength of its lip and mascara subcategories.

Fragrance

Fragrance net sales decreased 1%, driven by challenges in the company’s global travel retail business, partially offset by growth in both Asia/Pacific and EMEA markets.

Net sales from the company’s luxury brands, excluding its global travel retail business, grew mid-single-digits, reflecting strategic investments to support direct-to-consumer expansion, particularly freestanding stores.

Le Labo grew double-digits, while sales from Jo Malone remained flat and Tom Ford declined high-single-digits.

Haircare

Haircare net sales decreased 6%, primarily driven by Aveda, reflecting the timing of shipments and continued softness in the company’s North America salon channel.

Fabrizio Freda, President and Chief Executive Officer at The Estée Lauder Companies, said: "Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated.

"While we believe the new economic stimulus measures in China present medium- to long-term potential for stabilisation and ultimately growth in prestige beauty, we anticipate still-strong declines near-term for the industry in China and Asia travel retail. In the rest of our business, we continue to expect the ongoing normalisation of growth in prestige beauty, most notably in North America.

"With this complex industry landscape, including the particular difficulty in forecasting the timing of market stabilisation and recovery in China and Asia travel retail, and in the context of leadership changes, we are withdrawing our FY25 outlook."

The new trading update comes shortly after The Estée Lauder Companies confirmed the appointment of Stéphane de La Faverie as its new CEO, replacing Freda, who will retire after more than 16 years at the business.

Freda added: "Having worked alongside Stéphane for many years, I am thrilled to welcome him as our next President and Chief Executive, and look forward to supporting a seamless transition for the next several months.

"In an industry as dynamic as prestige beauty, Stéphane’s deep knowledge, exceptional strength as a leader, and unique ability to combine inspiration, authenticity, and strategic insights to drive profitable growth will enable him to move us forward with speed and agility."