Double-digit sales growth in travel retail has contributed to a healthy first quarter performance for The Estée Lauder Companies.

The group posted a +14% year-on-year increase in net sales, to US$3.27 billion. Incremental sales from the company’s recent acquisitions of Too Faced and BECCA contributed approximately four percentage points of the reported sales growth.

Net earnings rose +45% to US$427 million, while diluted net earnings per common share increased +44% to US$1.14. The fiscal 2018 first quarter also includes the impact of the adoption of a new accounting pronouncement for share-based compensation, which added US$.06 to diluted earnings per share, The Estée Lauder Companies said.

Excluding the impact of foreign currency translation, adjusted net sales increased +13%. For the quarter, the positive impact of foreign currency translation on diluted net earnings per common share was US$.02.

President and Chief Executive Officer Fabrizio Freda: “Our online and travel retail channels and most luxury and mid-sized brands posted double-digit sales gains”

President and Chief Executive Officer Fabrizio Freda described the first quarter performance as “outstanding” and said it demonstrated “the power of our diverse brand portfolio to leverage our multiple engines of growth”.

He noted that the group had built on the global momentum of the last fiscal year, benefitting from a continued acceleration in China, Hong Kong, travel retail and global online, and strength in several developed and emerging markets in Europe.

“Our online and travel retail channels and most luxury and mid-sized brands posted double-digit sales gains,” he said. “In addition, we saw encouraging signs of improvement in some US prestige department stores, and our targeted expansion into more speciality-multi doors to reach new consumers continued to help us gain share.”

Freda noted that sales growth in the Estée Lauder brand continued to accelerate, with double-digit gains in the quarter. “Our earnings per share reflected the strong sales gains combined with our success in leveraging those sales through cost saving initiatives, efficiencies and continued financial discipline,” he said.

“For the full fiscal year, our forecast reflects strong programmes supported by focused advertising and marketing spending and sustained investments to further build capabilities for the long term.”

Given the first quarter performance and the company’s “confidence in the potential for our business”, Freda said The Estée Lauder Companies was raising its full-year constant currency sales growth forecast to between +8% and +9%. It is also increasing its constant currency earnings per share growth estimate, before restructuring charges, to +12% to +14%.

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Net sales and operating income in most of the company’s product categories were favourably impacted by a weaker US Dollar in relation to most currencies. Total operating income in constant currency, before charges, increased +33%.

Category performance


  • Net sales increased sharply, with double-digit gains from Estée Lauder, La Mer, GLAMGLOW and Origins.
  • The Estée Lauder brand grew globally, particularly in China and travel retail, due largely to the launch of Advanced Night Repair Eye Concentrate Matrix and gains in other Advanced Night Repair products. La Mer was driven by new products in its Genaissance franchise, the launch of The Moisturizing Matte Lotion, gains from existing products, and targeted expanded consumer reach.
  • Double-digit sales growth from GLAMGLOW reflected additional product assortments and targeted expanded consumer reach. Sales growth in Origins was generated in Asia and travel retail due to the continued popularity of several product lines in the facial mask and moisturiser sub-categories.
  • These increases were partially offset by lower skincare sales from Clinique and Aveda.
  • Operating income increased sharply, primarily from Estée Lauder and La Mer, reflecting higher sales.


  • Strong sales growth in make-up was primarily driven by incremental sales from the company’s fiscal 2017 second quarter acquisitions of Too Faced and BECCA, double-digit increases from Tom Ford in every region, and double-digit gains from Estée Lauder. Higher make-up sales were also generated from MAC.
  • Sales from Tom Ford more than doubled, driven primarily by its lip colour franchises, including the Tom Ford Lips & Boys and Soleil Color Collections. The eyeshadow and foundation sub-categories also performed well. At Estée Lauder, higher sales were fuelled by the Double Wear and Pure Color Lip product lines.
  • The higher sales from MAC were due to strong growth in the Asia Pacific region, particularly China and Hong Kong, and in travel retail.
  • These increases were partially offset by lower make-up sales in the USA, primarily from Clinique and Bobbi Brown. This reflected a soft retail environment due, in part, to slow foot traffic in some US brick-and-mortar stores.
  • Make-up operating income increased. There was strong growth from Tom Ford and Estée Lauder, primarily due to higher sales, and incremental operating income from Too Faced. This was partially offset by declines from Smashbox, Clinique and Bobbi Brown.

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  • Net sales increased, primarily due to strong double-digit gains from luxury brands Jo Malone London, Tom Ford and Le Labo.
  • Jo Malone delivered double-digit sales increases in every region. This reflected strong growth from existing fragrances, targeted expanded consumer reach and the recent launch of the English Oak fragrances.
  • Increased sales from Tom Ford reflected, in part, the continued popularity of the Signature and Private Blend lines of fragrances, including new product launches and growth from existing fragrances.
  • Le Labo benefitted from growth in existing products and new launches and targeted expanded consumer reach.
  • Partially offsetting these increases were lower sales of certain designer and Estée Lauder fragrances.
  • Fragrance operating income increased sharply, reflecting higher sales from Jo Malone and Tom Ford, as well as disciplined expense management.


  • Haircare sales were unchanged, with moderate growth from Aveda and Bumble and bumble offset by lower hair care sales from Origins.
  • The growth from Bumble and bumble reflected initial shipments in advance of the brand’s launch in Ulta Beauty, partially offset by softness in the salon channel. At Aveda, online sales grew, while sales in freestanding stores were lower.
  • Haircare operating income increased, reflecting disciplined expense management.

Performance by region

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The Americas

  • Sales in North America benefitted from incremental sales from the recent acquisitions of Too Faced and BECCA.
  • Several of the company’s brands generated sales growth, led by double-digit gains from Tom Ford and La Mer, and strong gains from Jo Malone.
  • The Estée Lauder brand grew slightly in North America with gains in skincare, partially offset by lower fragrance sales.
  • Sales in the company’s online and speciality-multi channels grew by strong double digits.
  • Sales decreases, primarily attributable to the decline in retail traffic in some US brick-and-mortar stores, were recorded principally for MAC, Clinique and certain designer fragrances.
  • Additionally, the severe weather conditions during the quarter in certain areas of the USA tempered sales growth.
  • On a reported basis, sales in Canada increased low-single digits, and Latin America declined slightly. In constant currency, sales in Canada and Latin America each decreased moderately.
  • Operating income in the Americas increased, primarily reflecting incremental operating results from Too Faced and BECCA, as well as disciplined expense management. Partially offsetting the higher results were lower results from MAC and Clinique, due to a decrease in sales.

Europe, the Middle East & Africa

  • The company generated strong sales growth in the region both on a reported basis and in constant currency, primarily due to strong double-digit sales gains in travel retail. Foreign currency translation increased reported sales by +2%, with the largest impact from Italy and Russia.
  • Most markets recorded sales growth, with the largest increases in Italy, the Balkans and India.
  • In travel retail, double-digit sales growth was generated across most brands, led by Estée Lauder, Tom Ford, Jo Malone and La Mer. Growth in global airline passenger traffic, particularly by Chinese travellers, new launch initiatives, and targeted expanded consumer reach each contributed to the sales gains.
  • Lower sales were posted in the Middle East, driven by retailer inventory rebalancing, reflecting the impact of the macro-environment on consumer purchases.
  • Operating income increased, primarily due to strong double-digit operating results in travel retail. Certain developed and emerging markets also contributed to the higher profits. The gains were partially offset by lower results in Switzerland and the Middle East.

Asia Pacific

  • On a reported basis and in constant currency, sales increased sharply, led by double-digit growth in China and Hong Kong.
  • The higher sales in China reflected double-digit gains in every brand except designer fragrances. Estée Lauder, MAC, La Mer, Tom Ford and Jo Malone led the sales growth. Sales benefitted, in part, from continued demand for make-up products, an acceleration in skincare and targeted expanded consumer reach. The company generated double-digit sales growth in virtually every channel.
  • The sales increase in Hong Kong reflected solid domestic growth and a rise in tourism. Growth was primarily driven by Estée Lauder, La Mer and MAC and contributions from Tom Ford and Jo Malone.
  • In Asia Pacific, operating income increased, primarily due to improved results in China and Hong Kong driven by higher sales. Operating results were lower in Japan.