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Estee Lauder (EL): Skin care flourishes and makeup languishes in a mixed quarter

For the full year of 2021, net sales are expected to increase 11-12% year-over-year

Shares of The Estee Lauder Companies Inc. (NYSE: EL) were down 8% on Monday after the company reported mixed results for the third quarter of 2021. Earnings surpassed market expectations while revenues fell short of projections. The stock has gained 65% in the past one year.

Quarterly numbers

Net sales rose 16% year-over-year to $3.86 billion while adjusted EPS amounted to $1.62 in Q3 2021. The company saw sales growth across all its regions and most of its product categories and exceeded its own sales and earnings targets despite the challenges posed by the COVID-19 pandemic.

Category and regional performance

Estee Lauder’s skin care and fragrance businesses witnessed the highest sales growth during the third quarter rising 31% and 30% respectively. Skin care benefited from demand for skin repair and revitalizing products. Brands such as La Mer and Clinique posted double-digit growth with La Mer witnessing growing demand from male customers, who now represent over 15% of sales in mainland China, a region that yielded significant gains for the brand.

Fragrance sales benefited from growth in brands such as Jo Malone London, Tom Ford Beauty and Kilian Paris. These brands witnessed double-digit sales increases helped by strong performance during holidays such as the Chinese New Year and Valentine’s Day as well as the success of new product launches.

Estee Lauder saw sales in hair care grow 8% during the quarter. Makeup, on the other hand, reported a year-over-year sales decline of 11% in Q3. Sales fell across almost all brands due to fewer social gatherings and a decrease in makeup-wearing occasions due to the pandemic.

Estee Lauder saw increases across all its regions – the Americas, Europe, Middle East and Africa (EMEA), and Asia/Pacific. This was helped by growth in places like Russia, mainland China, Australia and Korea. Places like the UK, France and Spain saw sales declines due to store closures and restrictions caused by the resurgence of the pandemic.

Store fleet and ecommerce

Estee Lauder’s stores in the US and China remained open through the third quarter but in places like the UK, Japan, Canada and France, stores were closed due to the pandemic. Even in places where stores were open, customer traffic remained slow due to the pandemic.

Amid the store closures, ecommerce saw a huge pickup. The company saw strong online sales growth in its fragrances and hair care segments. By region, online sales rose double-digits in the Americas and Asia/Pacific while in EMEA, online sales doubled as focus on digital channels increased.  


For the full year of 2021, net sales are expected to increase 11-12% year-over-year. Adjusted EPS is projected to be $6.05-6.15.

Click here to read the full transcript of Estee Lauder Q3 2021 earnings conference call

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