Estée Lauder’s June 2023 full-year revenue down 10.4% to JPY 2,306.9 billion due to travel retail and skincare reliance – WWD JAPAN

The Estée Lauder Companies’ full-year financial results for the fiscal year ending June 2023 show that net sales were US$15.91 billion (approximately 2.3069 trillion yen), a year-on-year decrease of 10.4%, and operating income was 15, a year-on-year decrease of 52.4%. Profit decreased by US$109 million (approximately 218.8 billion yen) year-on-year, and net profit decreased by 58% to US$1.006 billion (approximately 145.8 billion yen). Affected by the new crown virus, the business environment continues to be turbulent. The struggle to catch up in the Asian travel retail market, in particular, resonated. In addition, a strong global dollar, inflation and fears of a recession also weighed on companies, leading to lower sales for the year.

In terms of categories, sales of skin care products decreased by 17.1% year-on-year to US$8.202 billion (approximately 1,189.2 billion yen), sales of cosmetics decreased by 3.3% year-on-year to US$4.516 billion (approximately 654.8 billion yen), and sales of perfumes increased year-on-year 1.5% to 2.512 billion US dollars (approximately 364.2 billion yen), hair care increased 3.4% to 653 million US dollars (approximately 94.6 billion yen). The sharp decline in skincare was mainly due to a decline in travel retail in Asia for Estée Lauder, LA MER and Dr. JART+. The decline in the skin care business was partially offset by the success of new products from “THE ORDINARY” and the new “M·A·C” skin care line “Hyper Real”.

In color cosmetics, sales declines in Estée Lauder, TOM FORD BEAUTY and La Mer were partially offset by sales growth in M·A·C and Clinique. In terms of fragrance, “Estee Lauder”, “LE LABO”, “Tom Ford Beauty”, “Clinique” and “KILIAN” were almost on par, but “ALAMIS” and “Michael Kors” were launched in June 2010. (MICHAEL KORS) and TOMMY HILFIGER were offset by the termination of the Aramis designer fragrance division. Sales of hair care products rose, driven by The Ordinary.

In terms of regions, sales in North America decreased by 2.3% year-on-year to US$4.518 billion (approximately 655.1 billion yen), sales in Europe/Middle East/Africa decreased by 19% year-on-year to US$6.225 billion (approximately 90.26 billion yen), Asia Pacific Regional sales fell 4.5% year-on-year to US$5.194 billion (approximately 753.1 billion yen). The U.S. was headlined by inflationary pressures and recession fears, a slow recovery at retailers, tightening inventories at some retailers and a decline due to the end of designer fragrances. Growth in Latin America, led by Brazil and Mexico, was driven by growth in cosmetics, partially offsetting a decline in North America.

Sales in the Asia-Pacific region fell in the first half due to the increase in the number of coronavirus cases in mainland China and related restrictions. In addition, Hainan Island, as a major hub for travel retail, is also a headwind for prolonged store closures, with sales still sluggish even after tourism resumes. The blow was exacerbated by tight inventories at some retailers. In South Korea, travel retail is slowing due to COVID-19 restrictions. In addition, longer-than-expected delays in the resumption of international flights, visa issuance and group travel have made the recovery of travel retail in Asia more difficult. This was partially offset by sales growth in Hong Kong SAR, Macau SAR and Southeast Asia.

President and CEO Fabrizio Freda said in a statement: “Hainan Island has come under increasing pressure in Asia’s travel retail sector in the fourth quarter. May-June Retail sales trends in March have deteriorated and have deteriorated sharply following enforcement measures from regulatory activities, favoring sustainable long-term growth but posing a significant short-term headwind during the transition. In terms of full-year FY2023 results, we are in Many developed and emerging markets saw sales growth in existing businesses and a larger share of premium beauty, but Travel Retail Asia, particularly in skincare, put pressure on earnings. “North America continued to experience weak growth, with Fragrances doing well, All regions posted double-digit growth, and Cosmetics also posted double-digit growth as more markets entered the post-Q4. Pandemic Era”.

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