Nitheesh NH
[caption id="attachment_94926" align="aligncenter" width="700"]
Source: Company reports/Coresight Research[/caption]
Estée Lauder 4Q19 and FY19 Results
Estée Lauder reported 4Q19 revenues of $3.53 billion, up 9% year over year compared to $3.3 billion in the prior-year period, beating the consensus estimate of $3.53 billion. Adjusted, non-GAAP EPS was $0.68, compared to $0.61 in the year-ago quarter, up 12% and beating estimates by $0.10.
For the full fiscal year, net sales reached $14.9 billion, increasing 9% from $13.7 billion in the prior year. Diluted net earnings per common share increased to $4.82 compared with $2.95 reported in the prior year, increasing 21%, excluding the negative impact of currency translation, the benefit from the adoption of ASC 606 and other items.
By Category
Skincare is the company’s largest and best-performing category, comprising 44% of sales, and rising 17% on a reported basis to $6.55 billion in FY19. Estée Lauder posted sales growth in skin care in every region, led by Estée Lauder and La Mer. Clinique’s skin care net sales also grew globally in constant currency.
The Estée Lauder brand delivered double-digit net sales growth in all regions. The increase reflected continued strength in certain core product franchises. Double-digit growth from La Mer was also broad based, with net sales increasing across all regions and channels, driven by hero products including Crème de la Mer, The Concentrate and The Treatment Lotion.
The company’s second largest category, makeup, accounted for 39.4% of sales in FY19 and grew 4% as reported to $5.86 billion in 2019. The growth was driven by higher net sales from Estée Lauder, MAC, Tom Ford Beauty and La Mer, along with the Double Wear franchise and the Pure Color line of products. Too Faced also contributed to the growth. These increases were partially offset by lower net sales from Clinique and Smashbox.
Fragrance sales fell 1% on a reported basis, to $1.80 billion in 2019. The decrease was mainly caused by the adoption of ASC 606. Adjusting for the impact of ASC 606, total net sales in constant currency increased 2%. Growth was driven by luxury fragrances, including Jo Malone London, Tom Ford Beauty, Le Labo and By Kilian. However, fragrance operating income declined, primarily driven by investments in advertising, promotional activities and store operations to support targeted expanded consumer reach, as well as lower net sales from certain designer fragrances. The fragrance category accounts for 12.1% of sales.
Hair care, the company’s smallest category at just 3.9% of sales, increased 3% as reported to $584 million in 2019. The growth primarily reflected higher sales from Aveda, particularly online, driven by the launch of its Cherry Almond Softening Shampoo and Conditioner and the continued success of certain hero franchises, such as the Rosemary Mint and Shampure product lines. The increase was partially offset by lower net sales from Bumble and bumble, primarily in the North America salon and specialty-multi channels.
By Geography
Nearly every market in the Asia Pacific region and many other important emerging markets around the world saw strong growth.
The Asia Pacific region saw the strongest growth, with net sales jumping from $3.04 billion in 2018 to $3.67 billion in 2019. China, Hong Kong and emerging markets in Southeast Asia continued to deliver excellent net sales growth, and Japan and Korea were also strong contributors. The company generated double-digit net sales growth in every product category and major channel.
Sales in Europe, the Middle East and Africa grew 15% as reported, to $6.45 billion. The company attributed this growth to the travel retail channel, online and most emerging markets in the region. Net sales in the Middle East, including Turkey, as well as in Russia and India, grew double-digits in constant currency. This growth was partially offset by lower net sales in certain Western European markets, primarily Benelux, as well as in the UK.
In the Americas, sales declined 5% as reported to $4.74 billion in 2019. The company attributed lower sales to challenges in brick-and-mortar stores face in North America as net sales online continued to grow across brand.com and retailer.com.
Outlook
For FY2020, Estée Lauder raised revenue growth guidance to 7-8%, compared to prior guidance of 6-8%. The company also raised its full year EPS guidance to $5.62-5.74.
Estée Lauder believes its Global Prestige Beauty line will remain a strong product area driven demographic trends and desirable products. It forecasts global prestige beauty to grow approximately 6-7% during the fiscal year. The company plans to continue to invest in the most compelling opportunities including those in emerging markets beyond China.
Source: Company reports/Coresight Research[/caption]
Estée Lauder 4Q19 and FY19 Results
Estée Lauder reported 4Q19 revenues of $3.53 billion, up 9% year over year compared to $3.3 billion in the prior-year period, beating the consensus estimate of $3.53 billion. Adjusted, non-GAAP EPS was $0.68, compared to $0.61 in the year-ago quarter, up 12% and beating estimates by $0.10.
For the full fiscal year, net sales reached $14.9 billion, increasing 9% from $13.7 billion in the prior year. Diluted net earnings per common share increased to $4.82 compared with $2.95 reported in the prior year, increasing 21%, excluding the negative impact of currency translation, the benefit from the adoption of ASC 606 and other items.
By Category
Skincare is the company’s largest and best-performing category, comprising 44% of sales, and rising 17% on a reported basis to $6.55 billion in FY19. Estée Lauder posted sales growth in skin care in every region, led by Estée Lauder and La Mer. Clinique’s skin care net sales also grew globally in constant currency.
The Estée Lauder brand delivered double-digit net sales growth in all regions. The increase reflected continued strength in certain core product franchises. Double-digit growth from La Mer was also broad based, with net sales increasing across all regions and channels, driven by hero products including Crème de la Mer, The Concentrate and The Treatment Lotion.
The company’s second largest category, makeup, accounted for 39.4% of sales in FY19 and grew 4% as reported to $5.86 billion in 2019. The growth was driven by higher net sales from Estée Lauder, MAC, Tom Ford Beauty and La Mer, along with the Double Wear franchise and the Pure Color line of products. Too Faced also contributed to the growth. These increases were partially offset by lower net sales from Clinique and Smashbox.
Fragrance sales fell 1% on a reported basis, to $1.80 billion in 2019. The decrease was mainly caused by the adoption of ASC 606. Adjusting for the impact of ASC 606, total net sales in constant currency increased 2%. Growth was driven by luxury fragrances, including Jo Malone London, Tom Ford Beauty, Le Labo and By Kilian. However, fragrance operating income declined, primarily driven by investments in advertising, promotional activities and store operations to support targeted expanded consumer reach, as well as lower net sales from certain designer fragrances. The fragrance category accounts for 12.1% of sales.
Hair care, the company’s smallest category at just 3.9% of sales, increased 3% as reported to $584 million in 2019. The growth primarily reflected higher sales from Aveda, particularly online, driven by the launch of its Cherry Almond Softening Shampoo and Conditioner and the continued success of certain hero franchises, such as the Rosemary Mint and Shampure product lines. The increase was partially offset by lower net sales from Bumble and bumble, primarily in the North America salon and specialty-multi channels.
By Geography
Nearly every market in the Asia Pacific region and many other important emerging markets around the world saw strong growth.
The Asia Pacific region saw the strongest growth, with net sales jumping from $3.04 billion in 2018 to $3.67 billion in 2019. China, Hong Kong and emerging markets in Southeast Asia continued to deliver excellent net sales growth, and Japan and Korea were also strong contributors. The company generated double-digit net sales growth in every product category and major channel.
Sales in Europe, the Middle East and Africa grew 15% as reported, to $6.45 billion. The company attributed this growth to the travel retail channel, online and most emerging markets in the region. Net sales in the Middle East, including Turkey, as well as in Russia and India, grew double-digits in constant currency. This growth was partially offset by lower net sales in certain Western European markets, primarily Benelux, as well as in the UK.
In the Americas, sales declined 5% as reported to $4.74 billion in 2019. The company attributed lower sales to challenges in brick-and-mortar stores face in North America as net sales online continued to grow across brand.com and retailer.com.
Outlook
For FY2020, Estée Lauder raised revenue growth guidance to 7-8%, compared to prior guidance of 6-8%. The company also raised its full year EPS guidance to $5.62-5.74.
Estée Lauder believes its Global Prestige Beauty line will remain a strong product area driven demographic trends and desirable products. It forecasts global prestige beauty to grow approximately 6-7% during the fiscal year. The company plans to continue to invest in the most compelling opportunities including those in emerging markets beyond China.