Estée Lauder Posts Surprise Revenue Growth, Beats Profit on Strong China Demand | The Business of Beauty


Zalando Estée Lauder beauty products. Zalando

Estée Lauder Cos Inc on Friday reported a surprise rise in second-quarter sales and handily beat profit estimates, as the M.A.C brand owner benefited from a strong demand for its premium skin-care products and fragrances in China.

Shares of the New York-based company, whose skin care segment posted a 28 percent growth on higher demand for its La Mer and Clinique labels, were up 5 percent in premarket trade. The stock gained 29 percent in 2020.

A sustained strong demand for skin care products, including serums and moisturisers, from customers keeping up their self-care routine has helped Estée Lauder offset the impact of weak demand for traditional makeup items such as foundation and lipsticks.

“The powerful engines of skin care, fragrance, Asia/Pacific, travel retail in Asia, and global online fuelled our performance despite the increasing complexity of the pandemic,” Chief Executive Fabrizio Freda said.

Sales in its Asia-Pacific market rose 35 percent in the second quarter, boosted by a robust demand during Tmall’s Singles’ Day shopping event in China, helping Estée Lauder post its first growth in overall revenue since the onset of the pandemic.

The Clinique brand owner has been controlling its advertising and promotional costs, while focusing on its e-commerce business to combat the pandemic’s fallout on its brick-and-mortar stores.

Estée Lauder also said it planned to resume its share buyback program during the second half of the fiscal year.

Net sales rose to $4.85 billion from $4.62 billion a year earlier, beating a Refinitiv IBES estimate of $4.49 billion.

Excluding items, Estée Lauder earned $2.61 per share, much higher than analysts’ estimate of $1.69.

The company, however, forecast third-quarter net sales to grow between 13 percent and 14 percent as makeup sales drag, while analysts on average estimate net sales to rise about 15.3 percent to $3.86 billion, according to IBES data from Refinitiv.

By Aditi Sebastian and Praveen Paramasivam; Editor: Vinay Dwivedi



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