The Estée Lauder Companies has enjoyed “outstanding” financial results for its fiscal year, which ended 30 June, with net sales up 9% year-on-year, to $14.86bn.
Travel retail was among the factors driving strong growth for the company, with Europe, the Middle East and Africa reporting strong net sales growth from the particular channel.
Within the EMEA region (overall up 16% year-on-year to $1.62bn), operating income increased primarily due to strong double-digit growth from the travel retail market, led by Estée Lauder, La Mer, M· A· C, Tom Ford Beauty and Origins.
More specifically, M· A· C’s net sales increase was led by double-digit growth from Greater China, Japan and the Middle East, as well as travel retail, while Tom Ford Beauty saw similar growth in sales, primarily driven by its lip color and eye shadow products in Asia/Pacific and the travel retail channel.
Growth also reflected the increase in international passenger traffic, improved conversion and “strategic” investments to support both new and existing products, according to The Estée Lauder Companies.
The company added that innovation and expanded targeted consumer reach also contributed to growth.
Travel retail, online and innovation among growth drivers
President and Chief Executive Officer Fabrizio Freda said: “Fiscal 2019 was an outstanding year for our company. We achieved strong net sales gains across our business, fueled by investments in our strategic priorities, including improved data analytics that helped power our innovation and digital marketing. Our winning strategy led to continued share gains in global prestige beauty.
“Many engines drove our growth. They included: nearly every market in the Asia/Pacific region and many other important emerging markets around the world; our skin care category in every region; the travel retail and online channels globally; and compelling innovations and high-quality products, which drove strong repeat purchases.
“Globally, three of our four largest brands grew strongly as did many of our small and mid-sized brands. Our results were particularly impressive given macro volatility and challenges in several key markets demonstrating our successful strategy of multiple engines of growth and our agility to reallocate resources to the best opportunities.”
Geopolitical tensions reflected in 2020 outlook
Looking ahead, the firm is expecting “strong” growth for 2020, but warned of risks related to “social, economic and political issues”, including geopolitical tensions, regulatory matters, global security issues, currency volatility and economic challenges that could affect consumer spending in certain countries and travel corridors.
In particular, although it continues to be “optimistic” about the strength of long-term growth in travel retail, the company has reflected the escalation of trade tensions between the US and China, the increase of tariffs in China and the gradual moderation of net sales growth in China and travel retail from recent levels in its 2020 fiscal outlook.
