02.02.23
The Estée Lauder Companies Inc. reported net sales of $4.62 billion for its second quarter ended December 31, 2022, a decline of 17% from $5.54 billion in the prior-year period, including negative impacts from foreign currency. Organic net sales fell 11%.
For the six months ended December 31, 2022, the company reported net sales of $8.55 billion, a 14% decrease compared with $9.93 billion in the prior-year period. Organic net sales decreased 8%.
During the first half of fiscal 2023, the Company’s business was also negatively impacted by the strong U.S. dollar, along with inflationary pressures and recession concerns, which caused certain retailers in the United States to tighten inventory. While the Company’s monthly retail trends improved sequentially during the fiscal 2023 second quarter in the United States, the pace was slower than anticipated resulting in lower replenishment orders compared to the prior-year period.
Fabrizio Freda, president and chief executive officer said, “We delivered on our expectations for the second quarter of fiscal 2023, despite the incremental pressure of COVID-19 in China in December. Many developed and emerging markets around the world outperformed to realize our organic sales growth outlook and, given disciplined expense management and moderation of the stronger U.S. dollar, we exceeded our adjusted diluted EPS outlook. Fragrance excelled globally, while Makeup prospered in a great number of markets, as our brands are realizing the promise of the category’s renaissance as usage occasions resume.”
Makeup net sales decreased 3%, primarily reflecting the ongoing COVID-related impacts affecting Asia travel retail and mainland China, partially offset by the progression of the makeup renaissance as usage occasions increased in many other markets. Net sales growth from M·A·C and Clinique was offset by declines from Estée Lauder and Tom Ford Beauty.
Fragrance net sales grew in every region, driven primarily by growth from Estée Lauder, Le Labo and Tom Ford Beauty.
Hair Care net sales rose 4%, reflecting growth from both The Ordinary, due to the recent launch of the brand’s hair care products, and Aveda.
Reported net sales are forecasted to decrease between 14% and 12% in the third quarter of fiscal 2023 versus the prior-year period.
For the full year fiscal 2023, reported net sales are forecasted to decrease between 7% and 5% versus the prior-year period.
For the six months ended December 31, 2022, the company reported net sales of $8.55 billion, a 14% decrease compared with $9.93 billion in the prior-year period. Organic net sales decreased 8%.
Operating Environment
The COVID-19 pandemic continued to disrupt the Company’s operating environment through the first half of fiscal 2023, including the COVID-related impacts, affecting Asia travel retail, particularly Hainan, and retail traffic in mainland China. In Asia travel retail, these challenges led to prolonged store closures as well as the curtailment of travel and caused the tightening of inventory by certain retailers who had previously placed orders in anticipation of the return of travel that was since delayed.During the first half of fiscal 2023, the Company’s business was also negatively impacted by the strong U.S. dollar, along with inflationary pressures and recession concerns, which caused certain retailers in the United States to tighten inventory. While the Company’s monthly retail trends improved sequentially during the fiscal 2023 second quarter in the United States, the pace was slower than anticipated resulting in lower replenishment orders compared to the prior-year period.
Fabrizio Freda, president and chief executive officer said, “We delivered on our expectations for the second quarter of fiscal 2023, despite the incremental pressure of COVID-19 in China in December. Many developed and emerging markets around the world outperformed to realize our organic sales growth outlook and, given disciplined expense management and moderation of the stronger U.S. dollar, we exceeded our adjusted diluted EPS outlook. Fragrance excelled globally, while Makeup prospered in a great number of markets, as our brands are realizing the promise of the category’s renaissance as usage occasions resume.”
Business Segments
Skin Care net sales declined 20%, primarily reflecting the challenges of the prolonged COVID-related impacts, including both the anticipated tightening of inventory by certain retailers in Asia travel retail and limited retail traffic in mainland China. Lower replenishment orders in the United States also negatively impacted the category’s growth. Net sales growth from The Ordinary and Bobbi Brown was offset by declines from Estée Lauder, La Mer, Dr.Jart+ and Clinique.Makeup net sales decreased 3%, primarily reflecting the ongoing COVID-related impacts affecting Asia travel retail and mainland China, partially offset by the progression of the makeup renaissance as usage occasions increased in many other markets. Net sales growth from M·A·C and Clinique was offset by declines from Estée Lauder and Tom Ford Beauty.
Fragrance net sales grew in every region, driven primarily by growth from Estée Lauder, Le Labo and Tom Ford Beauty.
Hair Care net sales rose 4%, reflecting growth from both The Ordinary, due to the recent launch of the brand’s hair care products, and Aveda.
Outlook
The Company expects the remainder of the fiscal year to be volatile, including risks associated with the uncertain pace of recovery of consumers in travel retail, and pressured by the ongoing disruptions due to the evolving COVID-19 environment, inflation, supply chain disruptions, and the risk of a slowdown in certain markets globally.Reported net sales are forecasted to decrease between 14% and 12% in the third quarter of fiscal 2023 versus the prior-year period.
For the full year fiscal 2023, reported net sales are forecasted to decrease between 7% and 5% versus the prior-year period.
