The Estée Lauder Companies Delivers Outstanding Fiscal Year 2018 Results
NEW YORK--(BUSINESS WIRE)--Aug 20, 2018--The Estée Lauder Companies Inc. (NYSE:EL) today reported strong financial results for its fourth quarter and fiscal year ended June 30, 2018. The Company reported fiscal year 2018 diluted net earnings per common share of $2.95 compared with $3.35 reported in the prior year. Excluding restructuring and other charges and adjustments, adjusted diluted net earnings per common share increased 30% to $4.51, and in constant currency rose 24%.
Fabrizio Freda, President and Chief Executive Officer, said, “Fiscal 2018 was an outstanding year for our Company. We generated higher sales in every region and product category and gained global share. By investing in our hero franchises, fast-growing channels and digital and social media, we delivered double-digit sales and adjusted earnings per share growth. We achieved record net sales in fiscal 2018 and one of our best performances in the last decade.
“Sales climbed in virtually all our brands and we hit milestones along the way. Among the top four brands, our flagship Estée Lauder brand achieved record global sales and grew 22% in constant currency, demonstrating the amazing equity of the brand. La Mer became the fourth brand in our portfolio to contribute well over $1 billion in net sales, and we increased sales at M•A•C and Clinique globally.
“Product innovation and creativity were strong across brands and Leading Beauty Forward provided us the flexibility to invest more in digital advertising behind our initiatives, which is accelerating our sales growth.”
Freda added, “In fiscal 2019, we will continue to create products that appeal to a more diverse and growing middle class around the world and we are confident that we can continue to achieve industry-leading sales and double-digit earnings per share growth. With a successful strategy that focuses on multiple engines of growth across products, geographies, channels and demographics, we expect to once again gain share globally in fiscal 2019.”
For the three months ended June 30, 2018, the Company reported net sales of $3.30 billion, a 14% increase compared with $2.89 billion in the prior-year period. The Company posted net sales growth in most brands and across-the-board gains in all geographic regions and product categories. Net sales increased in several developed and emerging markets, reflecting especially strong growth from the travel retail, online and specialty-multi channels. Excluding the impact of currency translation, net sales increased 12%.
Net earnings for the quarter were $186 million, compared with $229 million last year, and diluted net earnings per common share was $.49, compared with $.61 reported in the prior-year period. Adjusted diluted net earnings per common share rose 20% to $.61, and 11% in constant currency, for the three months ended June 30, 2018, excluding restructuring and other charges and adjustments, the impact of the new tax law in the United States and the effect of currency translation, as detailed in the table below.
Net sales and operating income in the Company’s product categories and regions outside the United States were favorably impacted by a weaker U.S. dollar in relation to most currencies. The Company reported operating income for the three months ended June 30, 2018 of $277 million, a 20% increase from $230 million in the prior year. Total operating income excluding the favorable impact of currency translation of $13 million and before charges and other adjustments, declined 1%, largely reflecting strategic investments made in digital and social media advertising to support long-term growth in fiscal 2019 and beyond.
Skin CareSkin Care net sales increased double-digits in every geographic region. Growth was particularly strong in Europe, the Middle East & Africa, travel retail, and China. By brand, the Estée Lauder, La Mer and Clinique brands were the largest contributors to growth. Operating income increased primarily from Estée Lauder and La Mer, reflecting higher net sales in Asia/Pacific and Europe, the Middle East & Africa, with the strongest growth in China and travel retail.
MakeupMakeup net sales increased. Strong double-digit growth from Estée Lauder, Tom Ford, Too Faced, BECCA and La Mer were partially offset by declines from M•A•C and Clinique. Makeup operating income declined primarily due to lower operating results from M•A•C that mainly reflected investments to support its turnaround in North America, stock adjustments in the Middle East, and higher advertising in Asia/Pacific to drive net sales in the fast-growing region.
FragranceHigher fragrance net sales reflected growth across all geographic regions. Jo Malone London, Tom Ford and Le Labo all had strong double-digit gains. Fragrance operating results improved, reflecting higher net sales from Tom Ford, primarily in North America, as well as the Europe, the Middle East & Africa region, which benefited from strong growth in travel retail. By Kilian also contributed to the growth. The category performance also reflected a decline from Estée Lauder fragrances in the United States.
Hair CareHair care net sales increased primarily due to the successful launch of new Aveda products. The increase in hair care operating income reflected the higher net sales.
The AmericasNet sales in The Americas increased, led by strong growth in Canada and Latin America. Net sales in the United States increased slightly. Operating income in The Americas decreased, primarily reflecting lower operating results from M•A•C due to investments in North America to turn around its business. The Company also strategically increased digital and social media investments across the brand portfolio. Higher general and administrative expenses, including an increase in employee compensation and investments in information systems, also contributed to the operating income decline.
Europe, the Middle East & AfricaNet sales increased, with double-digit gains in travel retail and in the Balkans and India, partially offset by stock adjustments in the Middle East as well as a decline in the United Kingdom. Operating income increased, led by strong double-digit growth in operating results in travel retail. The higher results were partially offset by lower results in the Middle East due to stock adjustments for several brands.
Asia/PacificNet sales increased led by strong double-digit growth in China and Hong Kong. Operating income increased due to higher results in Hong Kong, partially offset by higher advertising expense to build awareness and drive continued sales growth over the next year.
For the fiscal year, the Company achieved net sales of $13.68 billion, a 16% increase compared with $11.82 billion in the prior year. The Company posted net sales growth in each major product category and each geographic region. These results reflect, in part, the Company’s strategy to drive growth by targeting its investments to shifts in consumer and market dynamics across product categories, geographic regions, brands and distribution channels. This strategy positioned the Company well for the resurgence in global prestige skin care growth as well as the strong increase in demand among Chinese consumers.
Net sales increased in several developed and emerging markets, and reflected strong growth from the travel retail, online and specialty-multi channels. Skin care net sales benefited from increases at Estée Lauder, La Mer, Origins and Clinique. Makeup net sales growth was driven by increases from Estée Lauder, Tom Ford and M•A•C, as well as both incremental and higher comparable net sales from our fiscal 2017 acquisitions of Too Faced and BECCA. Fragrance net sales growth reflected increases from Jo Malone London, Tom Ford, Le Labo and By Kilian. Hair care net sales increased, reflecting growth from Aveda. Excluding the impact of currency translation, net sales increased 13%.
The Company reported operating income for the fiscal year ended June 30, 2018 of $2.05 billion, a 21% increase from the prior year of $1.69 billion. Total operating income excluding the favorable impact of currency translation of $103 million and before charges and other adjustments, increased 15%, largely reflecting strong sales growth partially offset by investments made in digital and social media advertising to support long-term growth in fiscal 2019 and beyond.
Net earnings for the year were $1.11 billion, an 11% decline, compared with $1.25 billion last year, and diluted net earnings per common share decreased 12% to $2.95, compared with $3.35 reported in the prior year. Adjusted diluted net earnings per common share increased 30% to $4.51, and in constant currency rose 24%, for the fiscal year ended June 30, 2018, excluding restructuring and other charges and adjustments, the impact of the new tax law in the United States and the benefit of currency translation as detailed in the table below. The fiscal year 2018 diluted net earnings per common share also includes the tax benefit of the adoption of a new accounting pronouncement for share-based compensation, which added $.13.
This article has been truncated. You can see the rest of this article by visiting http://www.businesswire.com/news/home/20180820005158/en.