Estée Lauder reported results for the second quarter of its 2021 fiscal year, with sales growth well above estimates. The Group benefited from strong demand from the Chinese market for its high-end perfumes and cosmetics.
The U.S. cosmetics group reported net sales of $4.85 billion for its second quarter ended December 31, 2020, an increase of 5% on a reported basis and 3% in constant currency, compared to $4.62 billion in the previous year. Analyses projected $4.49 billion, according to Refinitiv’s IBES data. Diluted earnings per share increased 56%.
In total, the Group reported net income of $873 million for the period, compared to $557 million a year earlier. Diluted net income per common share was $2.37, compared to $1.52 for the same period last year. Excluding foreign currency translation earnings, adjusted diluted earnings per common share increased by 21%.
“We are proud to have returned to growth in our second quarter, ahead of schedule, demonstrating the continued success of our multi-engine growth strategy. The powerful drivers of skincare, fragrances, Asia/Pacific, Travel Retail in Asia and global online activities fueled our performance despite the increasing complexity of the pandemic. Ten of our brands grew, reflecting the strength of our portfolio, our flagship products and our innovation, with double-digit revenue growth for the Estée Lauder and La Mer brands. For holiday and major shopping events, we welcomed new consumers and deepened our relationships with existing consumers. We successfully combined technology and data with our talented beauty consultants to deliver high quality services, enriching the online shopping experience. We invested in our growth engines and applied strict cost discipline in other areas, resulting in double-digit growth in adjusted earnings,” said Fabrizio Freda, President and CEO.
The strong and sustained customer demand for serums and other moisturizing creams enabled the cosmetics group to offset the impact of weak sales of makeup products.
Indeed, sales of skin care products increased by 28% and those of perfumes by 6%, while sales of make-up declined by 25% and those of hair products by 5%.
Estée Lauder was also able to count on the Chinese market with sales in the Asia-Pacific region increasing by 35% in the second quarter, while they declined by 2% in the Europe/Middle East/Africa region and by 15% in the Americas region. As a result, the American group was able to experience the first increase in sales since the beginning of the crisis.
For the current quarter, Estée Lauder expects adjusted earnings per share between $1.10 and $1.20, where analysts were expecting $1.46, and net income growth of 13 to 14 percent, compared to approximately 15.3 percent expected, due to a slowdown in makeup sales.
“Our performance this quarter gives us confidence as we delivered strong sales and earnings growth in a pandemic environment, while living our company’s values and investing in technology for new capabilities to support accelerating growth drivers. We continue to expect a sequential improvement in sales growth each quarter for the remainder of fiscal 2021 as we continue to drive the recovery,” said the President.
Featured photo : © Estée Lauder
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