Estée Lauder Companies (ELC) has reported a sales slump for its 2023 financial year.
Net sales decreased by 10% to US$15.91bn for the period ended 30 June 2023, with organic sales also down 6%.
This was the result of reduced travel retail sales in Hainan and Korea, but was partially offset by growth in Asia, Europe and the Middle East and Africa.
The owner of MAC and Jo Malone London was also affected by the acquisition of the Tom Ford brand in 2022, as well as the negative impact from foreign currency exchange rates.
Net earnings shrank to $1.01bn, compared with the earnings of $2.39bn the luxury beauty giant reported last year.
“For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in skin care, and we continued to experience softness in North America,” said Fabrizio Freda, ELC’s President and CEO.
The company’s skin care division saw sales fall by 14%, reflecting the challenges from travel retail in Asia and slower than anticipated recovery from the Covid-19 pandemic.
Skin care sales declined for Estée Lauder, La Mer and Dr.Jart+, but were partially offset by strong growth from The Ordinary, MAC and Bobbi Brown Cosmetics
Make-up sales were virtually flat compared with the prior year, but were held up by a strong performance from MAC and Clinique.
MAC in particular benefited from increased sales of hero products such as the Ruby Woo lipstick and recent face, lip and eye product launches.
Fragrance was the strongest performing category, with sales increasing by 14% and being led by Tom Ford, Estée Lauder and Le Labo.
Tom Ford’s Noir Extreme and Ombre Leather were the standout fragrance products for the year.
Le Labo also saw double digit sales growth across all of ELC’s operating markets, supported by healthy sales of Santal 33 and Another 13.
Revenues declined at Jo Malone London, however, which reflected the previously mentioned challenges in Asia travel retail.
Hair care sales rose by 6% and were driven by new product launches from The Ordinary and Aveda.
Despite the lower than expected sales, ELC expects to return to organic sales growth and deliver improved results in 2024.
“We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America,” added Freda.
“In this new fiscal year, we also intend to set the stage for a stronger fiscal year 2025 acceleration, with a very robust innovation pipeline planned across the two years and progressive margin rebuilding plans.”