Asia underpins stable and strong Estee Lauder result
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Estee Lauder Cos reported better-than-expected quarterly results on Monday, as people confined to their homes bought more of its skincare products online and sales improved in its Asian markets. The M.A.C brand owner has ramped up investments in its online business and seen growth in demand for its skincare products as customers opted for serums and moisturizers instead of make-up items during the Covid-19 pandemic.
“Before, online was mainly the destination of younger people. Now it’s for everyone. Everyone is online,” CEO Fabrizio Freda told analysts on a call.
The company’s shares rose as much as 8.3 percent to a record high on Monday as online sales soared 40 percent in the first quarter.
Its sales in the Asia-Pacific market rose 9 percent on the back of strong growth in South Korea, with demand at the company’s duty-free shops in China getting a boost from the government’s move to raise the annual tax-free shopping limit for tourists in the southern province of Hainan.
Total sales at the company’s duty-free shops were flat year over year, after dropping roughly 30 percent in the previous quarter due to widespread restrictions on air travel.
Total net sales fell 9 percent to $3.56 billion but exceeded analysts’ expectations of $3.46 billion, Refinitiv data showed.
Estee forecast net sales to decline between 3 and 5 percent in the second quarter, compared with estimates of a near 5 percent decline.
Questions & Answers
Q.What contributed to the better-than-expected quarterly results for Estee Lauder?
What contributed to the better-than-expected quarterly results for Estee Lauder?
The company's results were boosted by increased online purchases of skincare products by people at home during the pandemic. Sales also improved in its Asian markets, contributing to the positive performance.
Q.How has consumer behaviour changed regarding Estee Lauder's product categories?
How has consumer behaviour changed regarding Estee Lauder's product categories?
During the Covid-19 pandemic, customers prioritised skincare items like serums and moisturisers. There was growth in demand for these products, in contrast to makeup items, as people spent more time at home.
Q.What specifically drove sales growth in the Asia-Pacific market for Estee Lauder?
What specifically drove sales growth in the Asia-Pacific market for Estee Lauder?
Sales in Asia-Pacific rose due to strong growth in South Korea. Also, demand at duty-free shops in China improved following the government's increase to the tax-free shopping limit for tourists in Hainan.
Q.How did Estee Lauder's online sales perform during the first quarter?
How did Estee Lauder's online sales perform during the first quarter?
Online sales saw a significant increase, soaring by 40 percent in the first quarter. This growth was attributed to the company's ramped-up investments in its online business during the pandemic.