FY sales fall at Estée Lauder, China recovery slower than anticipated

Beauty giant Estée Lauder Companies (ELC) posted a 10 percent drop in net sales for the fiscal year ended June 30, 2023, in light of continued Covid-19 disruption and a slower than anticipated recovery in China.

Sales dropped from 17.74 million dollars in the year prior to 15.91 billion dollars, with organic net sales falling 6 percent.

ELC said that its operating environment had suffered due to prolonged store closures in certain parts of Asia, as well as lower levels of conversion and a slow down in travel retail despite travel resuming in the region.

Meanwhile, in EMEA, net sales dropped 16 percent while in The Americas there was a 2 percent drop, which ELC said had been impacted by a slow improvement in retail and the tightening of inventory by retailers in the first half of the fiscal year.

Overall, the company reported net earnings of 1.01 billion dollars, compared with that of its 2.39 billion dollars in the prior year.

Its diluted net earnings per common share was 2.79 dollars, down from its previous 6.55 dollars.

In a release, Fabrizio Freda, president and CEO said, “For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in Skin Care, and we continued to experience softness in North America.

“Fragrance excelled, up double digits in every region, and Makeup improved sequentially to double-digit growth in the fourth quarter as more markets emerged into the post-pandemic era.”

ELC said for FY24 it is expecting to return to organic sales growth and “deliver sequentially improving margin throughout the year”.

Freda added: “We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America. In Asia travel retail, we are taking actions to capture demand from the returning individual travellers and continuing to reduce inventories in the trade as we navigate the current market headwinds.

“In this new fiscal year, we also intend to set the stage for a stronger fiscal year 2025 acceleration, with a very robust innovation pipeline planned across the two years and progressive margin rebuilding plans.”