Europe currently the ‘standout’ performer for Estée Lauder as weak euro attracts travellers
The cosmetics maker delivered strong first quarter results, with net sales growing by 8% to reach $2.83bn (€2.59bn) compared to a figure of $2.63bn for the corresponding period last year.
Looking at the different regions, the company saw a particularly good performance in Europe, the Middle East and Africa, thanks to an influx of travellers attracted by the weak euro; and brands such as Tom Ford and Smashbox benefiting most from strong retail trends and well-received launches.
“From a geographic standpoint, Europe, the Middle East and Africa had a standout quarter. Net sales in the region rose 11% in constant currency, with double-digit performance occurring in both Western developed markets as well as emerging markets,” Tracey Thomas Travis, Chief Financial Officer and Executive Vice President, said on a conference call.
“Strong local demand for our products, as well as increased tourism in Western Europe, fuelled double-digit increases in major markets such as the UK, France, Germany, Italy and Spain.”
Travellers benefitting European sales
In the UK, France, Germany, and Italy in particular, Estée Lauder saw strong growth in retail which helped gain share in prestige beauty, with online and specialty multi-channels also performing well according to president and CEO, Fabrizio Freda, who added that sales in Boots and Douglas in Europe were particularly strong.
“Freestanding stores are a key component of our expansion in the region and we added 9 new location for MAC and three for Bobbi Brown during the quarter,” he adds, stating that the company continues to expand and is looking to improve its business in travel retail too.
The reasons for this are because sales at retail rose 7% with most of brands and markets growing, as consumers from abroad are spending less at home and are purchasing abroad.
Freda says this is particularly true of Chinese consumers who are travelling more and purchasing abroad, particularly in Japan and large European cities.
“For example, La Mer and Jo Malone benefited from the huge rise in Chinese tourists in Paris, which helped drive sales growth of more than 50% for these brands in France,” he says.
“We are getting great benefits in Europe and we see good progress in other markets where, like Japan, the Chinese in this moment are going and buying a lot.”
