Emerging markets and holiday sales aid Estee Lauder results boost

By Andrew McDougall

- Last updated on GMT

Related tags North america Procter & gamble Brand

Emerging markets and holiday sales aid Estee Lauder results boost
Estee Lauder was buoyed by a double-digit increase in second quarter earnings thanks to an unexpected boost from holiday sales and strong growth in emerging markets.

The company reported a sales increase of 15 percent in the second quarter, with particular success seen in China, where they rose 44 percent.

Spending bounces back

Fabrizio Freda, CEO, commented, “The company’s strong second quarter results complete an outstanding first half performance. Our sales and profits this holiday season came in higher than planned and demonstrate the vibrancy of our brand portfolio in solid as well as soft economies.”

“Our results were again broad based across brands, regions, categories and channels. The key drivers of our 10 percent sales growth were the US, China, travel retail and online. Importantly, we continued our consistent gross margin and operating margin improvements.”

Results in North America were bolstered by a rebound in affluent consumer spending, and the company will look to this, its largest market, to compensate for a lull in Europe, where the Eurozone crisis has played its part.

Advertising plays its part

Part of the dip can be attributed to the planned expenditure on advertising many of its new products such as the launch of its latest anti-aging cream in Europe.

However, in North America, advertising more broadly on platforms such as television, has helped to boost brand impact, according to the company.

Whereas consumer giant Procter and Gamble has announced that it will be looking to cut its advertising spend, Estee Lauder claims that advertising throughout the year, backing new product launches, as opposed to only advertising fragrances around the holidays, has been a winning tactic.

Customer experience goes digital

The US firm is also spending more on improving its presence in department stores, by installing Apple’s iPads at its counters in US stores, using the tablets to recommend products based on customer feedback.

Estee Lauder's Americas division posted 9 percent sales growth on a currency neutral basis, with sales up 9 percent in US department stores.

The company says that growth in North America, where it is making a push to grow sales in Canada, will offset some of the weakness in Europe, where debt concerns are taking their toll.

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