Estée Lauder chief expects holiday hike in sales

By Andrew MCDOUGALL

- Last updated on GMT

Estée Lauder chief expects holiday hike in sales

Related tags: Estée lauder companies, Department store

Estée Lauder CEO and president Fabrizio Freda believes that despite a recent slowdown in department store sales for mainstream brands such as Clinique, the market will pick up again as the holiday season approaches.

The Lauder boss was speaking in a conference call following the company’s first quarter 2014 sales announcement.

The U.S.-headquartered company reported a 5% sales increase of $2.68m in its first quarter thanks to online and travel-retail channels and double-digit growth in Latin America.

However there were slowdowns in southern Europe and Korea due to the economic slowdown, although the bigger concern was perhaps the declines of certain heritage brands and in mid-level department stores in the U.S. due to increased competition.

Holidays are coming

In July and August sales were softer than Estée Lauder expected, however Freda says this was because there in store than expected, but this improved in September.

The Lauder chief also believes that because the environment was focused on promotions, and cosmetics giant’s focus is not to increase promotions long term it suffered; but this will continue to improve in the holiday season, as it did already in September.

“Looking ahead, we are well positioned for the important holiday shopping period, with the strongest slate of new fragrances in more than a decade, as well as other innovative products across our categories,”​ he explains.

Freda was also keen to remind people that 60% of the fragrance sales in the United States happen during the holiday season, which is why his firm is focusing its fragrance investment and promotions in that period in order to drive profit.

Outlook

Looking further ahead, Freda adds that Estée Lauder is focused on achieving superior top-line growth by driving sales momentum throughout the fiscal year with its product and service innovations and planned marketing programs.

“For the full fiscal year, we continue to expect to grow sales 6% to 8% in local currency, which is double our global prestige beauty estimate, and we are revising our earnings per share estimate to $2.80 to $2.87, after taking up the bottom of the range,”​ he says.

For the first quarter, the company did see steady increases in the core product categories of skin care, cosmetics and fragrances, with sales growth particularly strong in the luxury and Mac brands, online and travel retail channels, and overall in emerging markets.

Related topics: Business & Financial

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