Buoyed by sales in skin care, Asia, travel retail and online, Estée Lauder Companies reported net sales of $4.85 billion for its second quarter ending December 31, an increase of 3% in constant currency year-over-over. In many ways, the prestige beauty conglomerate performed better than expected. On Friday, NPD reported that full year prestige sales declined by 19%. Makeup continued to suffer, down 40%, and skin care also declined, by 11%.
“We are proud to have returned to growth in our second quarter, earlier than we anticipated, demonstrating the enduring success of our multiple engines of growth strategy. The powerful engines of skin care, fragrance, Asia/Pacific, travel retail in Asia and global online fueled our performance, despite the increasing complexity of the pandemic,” said Fabrizio Freda, president and CEO, in an emailed press release.
By category, Freda reported on the company conference call that 10 of Estée Lauder Companies’ brands saw growth in the quarter, with La Mer and its namesake brand Estée Lauder seeing double-digit sales growth. Overall, skin care, grew by 25% for the quarter, with wins from La Mer and Estée Lauder, as well as Clinique and newly acquired Dr. Jart. However, net sales in makeup declined by 26%, lower than analysts’ expectations. This was felt across all brands, due to a decline in makeup usage and also its penetration in brick-and-mortar retail. On the conference call, the company emphasized that ELC’s color cosmetics’ brands have the highest footprint in physical stores.
Jane Lauder, Estée Lauder Companies’ recently appointed evp, enterprise marketing and chief data officer, said the company’s wins were driven by many factors, especially digital sales. “This quarter, when you look at online, for example, you see double-digit or triple-digit sales growth with every brand across every market. Skin care is continuing to go from strength to strength. We’ve gotten better at activating against these strengths.”
Lauder said many of the online gains in the quarter were driven by newer online improvements, such as livestreaming, live video, live chat and virtual try-on. ELC has been investing in these technological advancements for the better part of two decades.
“Live chat has been on many of our sites for quite some time, but as we went into the lockdown, [usage] increased. We were able to quickly up-skill many of our consultants, makeup artists and beauty advisors to do livestreaming, or live classes online, and answer questions in a one-to-one consultation,” she said. “Everybody has been really open to it.”
Creating a robust and connected store-to-digital experience will be crucial for the company, as Lauder said that most consumers today shop omnichannel. “A lot of the work we’re doing in my new role is really understanding the consumer journey. We started doing this in China and seeing what touchpoints she’s going to in order to make her choices on product. We know that [customers] do a lot of research online before they even come into a store, and then they connect back, so it’s making sure that we’re available and helpful at every stage of that journey.”
And while lipstick and foundation sales have been hit hard due to mask wearing, Lauder said she’s upbeat about the upcoming recovery. “Usage [or social] occasions are down, and that’s where we see [the majority of] makeup usage,” she said. “As things open up, and, and the pent-up demand for occasions happen, people are going to be more ready to use makeup. Even in China, it’s not the same yet with these big opportunities to go out, but it will happen.”