Estée Lauder Companies sales down -10% for fiscal year 2023

Estée Lauder Companies shared that it had experienced a -10% decline in sales for the fiscal year 2023 (which ended 30 June 2023), achieving net sales of $15.91bn in comparison to $17.74bn in 2022. It said this was “primarily driven by Asia travel retail in Hainan and Korea.”​

The company said it also faced challenges due to current exchange rates and the acquisition of the Tom Ford brand, which was completed in April this year.

Organic sales were down -6% in the period. Net earnings fell -57.7% year-on-year to $1.01 bn.

Although its operating income has widely decreased, the business returned to growth in the fourth quarter.

In an analyst earnings call to discuss the results, President and Chief Executive Officer Fabrizio Freda said:

“While we had a challenging year, we remain confident in our long-term strategy to realise the promising growth opportunity in global prestige beauty with our diversified portfolio brands, robust research and development capability, and global reach.” ​

“We are encouraged by the fundamental strengths of our business in the markets of EMEA, Asia/Pacific, Latin America, and are focused on our plans to recover growth in Asia travel retail and North America. For fiscal year 2024, we believe we are well positioned to return to organic sales growth and improve profitability.”​

Global skin care sales fell by 14%​

Estée Lauder Companies’ Skin care net sales fell by -14%, mainly due to challenges in Asia travel retail, including the slower than anticipated recovery from the COVID-19 pandemic.

The Estée Lauder, La Mer and Dr.Jart+ brands experienced net sales declines, while The Ordinary, M·A·C and Bobbi Brown Cosmetics all saw strong growth that partially offset the losses for other struggling brands.

However, net sales for Estée Lauder and La Mer increased in Asia/Pacific, benefiting from Estée Lauder’s Revitalizing Supreme+ franchise line of and La Mer’s The Moisturizing Soft Cream.

The Ordinary enjoyed growth across every region and benefited from the continued strength from hero products, successful innovation, such as New! Multi-Peptide Lash & Brow Serum and the Multi-Peptide Eye Serum, the brand’s launch into India and the Middle East in fiscal 2023 and specialty-multi growth.

Global makeup sales stayed flat​

While colour cosmetics sales were virtually flat compared to 2022, performance increased sequentially each quarter and it saw 13% growth in the fourth quarter.

Net sales growth from M·A·C and Clinique was offset by declines for Estée Lauder, TOM FORD and La Mer.

M·A·C experienced double-digit net sales growth from hero products and new launches, especially in the face, lip and eye subcategories. The increase in net sales also reflected the benefit from changes to the brand’s take back loyalty program made in the fiscal 2023 second quarter.

Clinique experienced net sales growth increases across every region, again with strong sales in the face, lip and eye subcategories.

Global net sales for Estée Lauder and La Mer were negatively impacted by the challenges in Asia travel retail, which was partially offset by double-digit net sales growth in EMEA.

TOM FORD makeup net sales also declined due to the challenges in Asia travel retail, but did grow in double digits in EMEA and the Asia/Pacific markets.

Hair care and fragrance enjoyed growth ​

Hair Care net sales rose 6%, with strong success for The Ordinary and Aveda.

Aveda fared especially well in EMEA and also enjoyed a successful launch into mainland China. However, operating results declined due to strategic investments to support the launch.

Meanwhile Fragrance net sales rose by 14% with double-digit growth across every region – led by TOM FORD, Estée Lauder and Le Labo.

TOM FORD fragrance net sales rose in nearly every market with strong sales for Noir Extreme and Ombre Leather and Noir Extreme Parfum.

Estée Lauder fragrances also saw success with existing products such as Beautiful and Estée Lauder Pleasures.

Le Labo's net sales rose and the brand saw growth in every region, benefiting from hero product franchises, such as Santal 33 and Another 13, as well as targeted expanded consumer reach, which included successfully launching into mainland China in the fourth quarter.

Jo Malone London's net sales were down, mainly due challenges in Asia travel retail, but this was partially offset by double-digit growth in Asia/Pacific.

Sales in EMEA dropped by -16%​

In the EMEA region, net sales decreased by -16%, which the company said was “primarily due to the challenges in Asia travel retail, including the slower than anticipated recovery from the COVID-19 pandemic.”​

However, there was an increase in net sales in developed EMEA markets driven by the United Kingdom, France, Germany, Spain and Italy. As well as double digits increases in net sales in nearly all EMEA emerging markets*, led by India.

Although global travel retail net sales decreased, travel retail net sales grew in strong double digits in both EMEA and The Americas.

In terms of future plans, Freda shared: “In Asia travel retail, we are taking actions to capture demand from the returning individual travellers and continuing to reduce inventories in the trade as we navigate the current market headwinds.” ​

“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.”​

* Emerging markets in EMEA are India, the Middle East, Turkey, South Africa, Central Europe, Israel, Russia and Kazakhstan.