Skin care strikes again: Estée Lauder Companies raises forecast thanks to luxury sales boom

By Sarah Parsons 2-May-2019

The owner of La Mer and Origins bucked the economic slowdown in China and accredited skin care sales to the sharp growth

La Mer was noted for its strong performance

Estée Lauder Companies (ELC) has raised its revenue forecast as skin care and China sales flourished in Q3 2019.

The owner of Lab Series and Smashbox reported net sales of US$3.74bn in the three months ending 31 March, an increase of 11% year-on-year.

While China’s economic slowdown has weighed down on some of the world’s largest companies, such as Apple, ELC bucked the trend by reporting a 31% growth in the Asia/Pacific region.

“We had anticipated a gradual moderation of growth in China and travel retail starting in the quarter, which didn’t happen, and that contributed to our overachievement,” said Fabrizio Freda, CEO of ELC.

“We continue to see strength in several of our key engines of growth and, as a result, we are again raising our net sales and EPS guidance for the year.”

Hong Kong and Japan were noted for strong growth and Korea net sales accelerated.

As a result, the beauty conglomerate has upped its predicted net sales for 2019 from 5-6% to 7-8%.

The importance of skin care highlighted in ELC’s earnings. The strongest category for the US firm, skin care sales rose by 18% to $1.73bn year-on-year, with Estée Lauder, La Mer and Origins noted for their contributions.

Make-up, ELC’s second highest earning category, increased by 10% driven by strong sales at Tom Ford Beauty, MAC, Estée Lauder and La Mer.

MAC’s success was helped by the limited edition Honor of Kings collection. Available exclusively in China, the mobile game-inspired lipstick range sold out within 24 hours.

Freda added: “Long term, we are uniquely positioned in one of the most attractive consumer sectors and are oriented to the fastest growing areas.

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“Favorable demographic trends make prestige beauty a desirable, growing industry, and as the best diversified pure play, we are confident in our ability to lead and to gain global share.”