Beauty Sales:

$17.7 billion

Key Personnel:

• William P. Lauder, executive chairman
• Fabrizio Freda, president and chief executive officer
• Carl Haney, executive vice president, research, product and innovation officer
• Jane Hertzmark Hudis, executive group president
• Jane Lauder, executive vice president, enterprise marketing and chief data officer
• Leonard Lauder, chairman emeritus
• Ronald S. Lauder, chairman, Clinique Laboratories, LLC
• Gregory F. Polcer, executive vice president, global supply chain
• Peter Jueptner, president, international
• Roberto Magana, senior vice president and chief procurement officer
• Mark Loomis, president, North America
• Joy Fan, president and CEO, China
• Sue Fox, president, UK, Ireland
• Ukachi Anonyuo, vice president, global packaging innovation strategy & portfolio management
• Michelle Freyre, global brand president, Clinique
• Glenn Evans, global brand president, Smashbox and GLAMGLOW
• Karen Housman, senior vice president/general manager travel APAC.

Major Brands/Products:

More than 25 prestige skincare, makeup, fragrance and hair care brands sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, M·A·C, La Mer, Bobbi Brown, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, Tom Ford Beauty, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frédéric Malle, Glamglow, Kilian Paris, Too Faced, Dr.Jart+, Deciem, Haeckels.

New Products:

Estée Lauder Perfectionist [CP+R] Wrinkle Lifting/Firming Serum, Estée Lauder Double Wear Sheer Long-Wear Makeup, Estée Lauder Luxury Fragrance Collection, La Mer The Micro Peel, Crème de la Mer Hydrating Infused Emulsion, MACStack mascara, Jo Malone London Night Collection Lavender & Moonflower Pillow Mist; Tom Ford Tom Ford Research Intensive Treatment Emulsion; Tom Ford Ombre Leather Parfum, Le Labo Thé Matcha 26; Aveda Nutriplenish Styling Treatment Foam.

Comments:

Global omnichannel capabilities were key to success at The Estée Lauder Companies Inc. (ELC), which reported net sales of $17.74 billion for its fiscal year ended June 30, 2022—an increase of 9% from $16.22 billion in the prior-year period. Organic net sales increased 8%, driven by double-digit growth in The Americas and Europe, and the Middle East & Africa (EMEA) regions. A “post-Covid-19” recovery in brick-and-mortar retail stores, as well as double-digit growth in global online sales and growth in travel retail boosted the bottom line and kept the prestige beauty giant in its No. 3 slot on Beauty Packaging’s Top 20 list.

ELC reported net earnings of $2.39 billion, compared with net earnings of $2.87 billion in the prior-year period.

Commenting on the year, Fabrizio Freda, president and chief executive officer, ELC, said, “We delivered excellent results in fiscal 2022, exceeding our expectations in the fourth quarter and achieving record revenue and profitability on an adjusted basis for the year. Our multiple engines of growth strategy proved invaluable amid pandemic and macro complexity, affording us the diversification to seize growth of the moment. The Americas and EMEA prospered, Fragrance soared, and Makeup realized the promise of its emerging renaissance.

“La Mer, M·A·C, and Jo Malone London led the contribution of double-digit organic sales growth by nine brands, impressive on its own and especially so given the significant pressure from Covid-19 in Asia/Pacific at the end of the year. Brick-and-Mortar and Online each grew globally, as we capitalized on reopening, extended our consumer reach in high-growth channels, and amplified our omnichannel capabilities.”

By category, Skincare held its No. 1 place as ELC’s most lucrative product category at nearly $9.9 billion in net sales for the year. Makeup at $4.7 billion was next, followed by Fragrance (which rose a remarkable 30% to $2.5 billion); and Hair Care ($639 million).

Skincare Sales Fluctuate

Skincare net sales grew in The Americas, which was offset by a decline in the EMEA region. Net sales growth from La Mer, Clinique and Bobbi Brown was offset by a decline from Estée Lauder.

Double-digit growth from La Mer was driven by strength among Chinese consumers in both mainland China and travel retail. Net sales growth reflected increases in hero products, including Crème de la Mer and the upgrade to The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in mainland China, also contributed to growth.

Clinique net sales growth was driven by strong demand for its hero products, including the Take The Day Off line of products and Even Better Clinical Radical Dark Spot Corrector + Interrupter. Bobbi Brown also reported strong double-digit skincare net sales growth in every region, led by robust demand from Chinese consumers. Meanwhile, Estée Lauder skincare net sales declined, reflecting challenges in the second half of fiscal 2022 due to the resurgence of Covid-19 cases in Asia, the closure of distribution facilities and increased restrictions. Estée Lauder was “disproportionately impacted” by the temporarily reduced capacity at the company’s distribution facilities in Shanghai in the fourth quarter.

Hero Products Boost Makeup

With many masks off, continued recovery in Western markets led to an increase in Makeup net sales among most brands. Both M·A·C and Estée Lauder led the growth. Hero products such as M·A·C’s Studio Fix, the launch of MACStack mascara, and effective social media campaigns contributed to the category’s successful rejuvenation. Double-digit net sales growth from Estée Lauder was fueled by the Double Wear and Futurist foundation product lines, as well as the successful launch of Double Wear Sheer Long-Wear Makeup.

Fragrance Brands Deliver

ELC’s net sales grew across every region and every fragrance brand, led by Jo Malone London, Tom Ford Beauty and Le Labo.

Jo Malone London’s net sales grew strong double digits, thanks to colognes, and hero franchises like English Pear & Freesia as well as the launches of House of Roses and the Blossoms Collection. Bath & Body and Home also delivered strong growth during consumers’ pent-up period.

Tom Ford Beauty grew strong double digits, due to strength in its Signature and Private Blend fragrances, including Black Orchid and Oud Wood. The launch of Ombre Leather Parfum was also a hit.

Le Labo also grew strong double digits with growth in all regions, and largely due to the recovery of brick-and-mortar, improved retail traffic, and targeted expanded consumer reach. Hero fragrances, such as Santal 33, as well as the successful launch of Thé Matcha 26, contributed to success.

Hair Care’s Growth

Hair care net sales rose across every region, reflecting increases from both Aveda and Bumble and bumble as brick-and-mortar recovered from prior-year closures related to Covid-19 through much of the world.

Aveda’s growth reflected the continued success of its hero franchises, including Botanical Repair and Nutriplenish, as well as the relaunch of Full Spectrum Semi-Permanent Treatment Hair Color and the launch of Botanical Repair Strengthening Overnight Serum.

Net Sales by Region

Net sales grew in every region except for a small dip in Asia Pacific. Total EMEA net sales led the way at nearly $7 billion. The Americas landed the year with nearly $4.7 billion, while Asia/Pacific contributed $5.4 billion.

EMEA net sales grew in nearly every market, led by the UK. The growth reflects strong double-digit recovery in brick-and-mortar. Net sales grew double digits in makeup, fragrance and hair care.

Global travel retail net sales increased year-over-year reflecting continued growth from Asia/Pacific despite increased travel restrictions beginning in March 2022 that particularly impacted Hainan.

In the Americas, net sales grew strong double digits in the U.S., Canada and Latin America as brick-and-mortar retail traffic recovered during the year. Net sales increased in every product category and in nearly every distribution channel. Brick-and-mortar net sales increased strong double digits, benefiting from the year-over-year increase in open retail locations, as well as improved traffic.

In North America, net sales growth was led by “makeup-starved” consumers, happy to be social again post-quarantine, as well as continued growth in fragrance. In Latin America, net sales also grew in nearly every market and product category.

Asia/Pacific saw a slight sales decline, mostly due to pandemic-related issues. Net sales declines in makeup and skincare were partially offset by net sales growth from fragrance and hair care in the region. Net sales declined in brick-and-mortar due to soft traffic in areas most impacted by rising cases of Covid-19, but were offset by strong double-digit online growth partly offset the decline in brick-and-mortar.

In mainland China, net sales remained relatively flat year-over-year as the impact from the rise in Covid-19 restrictions was mostly offset by very strong growth in the first half of fiscal 2022. Net sales benefited from successful programs during key shopping events, including the 11.11 Global Shopping Festival and the 6.18 Mid-Year Shopping Festival, where the Estée Lauder brand was ranked the No.1 prestige beauty flagship store on both Tmall and JD.

2021-2022 Highlights:

In September 2021, ELC announced they were winding down their Designer Fragrance Licensing Division. The beauty group’s Aramis and Designer Fragrances (ADF) division had licensing contracts with Donna Karan, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna, all of which will come to a close in June 2023.

In a statement, ELC said the move “will enable us to fully dedicate our attention and resources to our powerful and winning luxury and prestige fragrance portfolio, including Tom Ford Beauty, Jo Malone London, Le Labo, AERIN, EDPFM, KILIAN Paris, Estée Lauder and Clinique.”

ELC also announced its intention to shutter two brands, Becca Cosmetics and makeup, skin and body care line Rodin Olio Lusso.

After 27 years with The Estée Lauder Companies, Cedric Prouvé, group president, International, made the decision to retire effective June 30.

In November 2021, ELC announced the retirement of Chris Good, group president, North America.

Also in November, ELC announced they had joined numerous consumer product companies in partnering with Pulpex, creator of a first-of-its-kind renewable pulp bottle technology—becoming the consortium’s first prestige beauty company to support the development of a recyclable paper bottle made from responsibly sourced pulp. The ELC team said it is looking into scaling the Pulpex paper bottling technology across its brand portfolio.

In February 2022, ELC made a minority investment in microbiome-friendly skincare brand Haeckels.

In an industry-shaking move, in February, ELC fired executive group president John Demsey—who had played a monumental role at the company for 31 years—after he posted an offensive meme on his personal Instagram account that included a racial slur and a Covid-19 joke.

In March, in honor of National Youth HIV/AIDS Awareness Day on April 10, M·A·C Cosmetics created its first-ever NFT collection featuring the work of the late iconic artist and activist, Keith Haring. One-hundred percent of the purchase price from primary sales of the VIVA GLAM x Keith Haring NFT collection was donated to the M·A·C VIVA GLAM Fund to support youth impacted by HIV/AIDS.

In May, ELC suspended all commercial activity in Russia and Ukraine, and sales in those regions reportedly declined.

Also in May, the company announced that Jerrod Blandino and Jeremy Johnson, the co-founders of Too Faced Cosmetics, were departing the brand after 24 years “to embark on new entrepreneurial projects and endeavors,” effective June 30, 2022. Tara Simon was promoted to the role of global brand president, Too Faced.

In July, Estée Lauder partnered with the International Space Station. Two projects were selected by ISS National Lab’s team of scientists to receive funding (up to $1M total) from exclusive challenge partner Estée Lauder, with the intent of exploring environmentally responsible plastics alternatives aboard the space-based lab. As the exclusive partner of the challenge, Estée Lauder “has set out to champion the next generation of leaders in science to help drive sustainable packaging within the beauty industry and beyond.”

In August, ELC surprised the beauty industry when rumors flew about them potentially purchasing luxury brand Tom Ford, which encompasses beauty, fragrance, apparel, eyewear and accessories. They already hold a highly successful licensing deal for Tom Ford Beauty. At the time, The Wall Street Journal said that the potential $3 billion deal would be Estée Lauder’s biggest acquisition ever, but added that the beauty company is not the only party interested in snapping up Tom Ford. Next, rumors swirled about ELC being in discussions with French luxury fashion house Balmain, to create a beauty brand. The Balmain label currently includes luxe haircare products and accessories.

Looking Ahead:

Will Lauder have as successful of a year in 2023 as they did in 2022? Stay tuned. Reported net sales are currently forecasted to increase between 3% and 5% versus the prior-year period.

Commenting on the upcoming year, Freda said, “We are very confident in the strength of our company and in the vibrant long-term growth opportunity of prestige beauty, but recognize the environment remains complex and uncertain at this point in time. For fiscal 2023, we expect to deliver strong organic sales growth, fueled by our diversified growth engines and enticing innovation, and to take the opportunity in this volatile year to continue investing for our exciting future.”

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