Travel retail was one of the main drivers of growth as The Estée Lauder Companies generated a +9% year-on-year increase in net sales to US$14.86 billion for its fiscal year ended 30 June, 2019.

President and Chief Executive Officer Fabrizio Freda described the company’s performance as “outstanding”. He said: “We achieved strong net sales gains across our business, fuelled by investments in our strategic priorities, including improved data analytics that helped power our innovation and digital marketing. Our winning strategy led to continued share gains in global prestige beauty.

“With savings from our ‘Leading Beauty Forward’ initiative and cost discipline throughout the organisation, we grew profit far ahead of our net sales growth, while also investing in our strategic priorities.”

The US beauty house posted net sales growth in its international business and nearly all product categories. Excluding the negative impact of currency translation (US$371 million, or 2%) and the adoption of the new revenue recognition accounting standard ASC 606 (US$49 million, or less than 1%), net sales increased +12%.

Fiscal year 2019 diluted net earnings per common share came to US$4.82, compared with US$2.95 in the prior year. Excluding the negative impact of currency translation, the benefit from the adoption of ASC 606 and other items, adjusted diluted net earnings per common share increased +21%.

As well as travel retail, other growth drivers included the skincare category in every region and the online channel globally. Nearly every market in the Asia Pacific region and “many other important emerging markets” around the world also drove growth, according to the company.

Freda also noted the impact of innovations and the quality of products offered, which he said drove strong repeat purchases. “Globally, three of our four largest brands grew strongly as did many of our small- and mid-sized brands. Our results were particularly impressive given macro volatility and challenges in several key markets demonstrating our successful strategy of multiple engines of growth and our agility to reallocate resources to the best opportunities.

“Importantly, this year’s results cap a remarkable decade of strategic and operating achievements. Since launching our current strategy in 2009, we have diversified and strengthened our company, creating a solid foundation to continue our growth. We ended the year with a strong fourth quarter, driven largely by the same growth engines we had throughout the year. Additionally, we saw modest improvement in our US business despite a tough retail environment.”

Looking ahead, Freda noted that prestige beauty continues to be one of the most desirable consumer sectors. “As the best diversified pure play in the industry, we are uniquely positioned to capture global share. In fiscal 2020, we plan to continue to invest in the most compelling opportunities, including those in emerging markets beyond China. We expect another year of strong net sales growth, margin improvement and a double-digit increase in earnings per share.”

Performance by region

In The Americas, net sales decreased -4% in constant currency terms. “Despite challenges in brick-and-mortar stores in North America, net sales online continued to grow across brand.com and retailer.com and the company continued to diversify into faster-growing channels,” Estée Lauder said. Net sales in Latin America declined slightly in constant currency. Net sales growth in Brazil, Colombia and Peru was more than offset by declines in other markets.

Net sales increased +18% in Europe, the Middle East & Africa. The performance was primarily driven by strong net sales growth from the travel retail channel, online and most emerging markets in the region. Net sales in the Middle East, including Turkey, as well as in Russia and India grew double-digits in constant currency. This growth was partially offset by lower net sales in certain Western European markets, primarily Benelux, as well as in the UK.

Net sales growth from the travel retail channel was broad-based, with many of the top-10 brands in the channel growing double-digits, led by Estée Lauder, La Mer, MAC, Tom Ford Beauty and Origins. Growth also reflected the increase in international passenger traffic, improved conversion and strategic investments to support both new and existing products. In addition, successful innovation and expanded targeted consumer reach also contributed to growth, the company said.

In Asia Pacific, total net sales increased +25%. The company delivered strong double-digit net sales increases, both on a reported basis and in constant currency. The growth was broad-based, with all markets in the region growing and more than half up double digits in constant currency. China, Hong Kong and the emerging markets in Southeast Asia continued to deliver excellent net sales growth, and Japan and Korea were also strong contributors. The company generated double-digit net sales growth in every product category and major channel.

Performance by category

In skincare, total net sales in constant currency increased +21%. Growth was seen across most regions, led by Estée Lauder and La Mer. Clinique’s skincare net sales also grew globally in constant currency.

Net sales growth of +7% in makeup was primarily driven by higher net sales from Estée Lauder, MAC, Tom Ford Beauty and La Mer. Too Faced also contributed to the growth. These increases were partially offset by lower net sales from Clinique and Smashbox. Travel retail was cited as a major driving force for both MAC and Tom Ford Beauty.

In fragrances, total net sales in constant currency increased +2%. Excluding the unfavourable foreign currency translation impact of approximately US$50 million, net sales increased, reflecting growth from luxury fragrances, including Jo Malone London, Tom Ford Beauty, Le Labo and By Kilian. These increases were mostly offset by lower net sales from certain designer fragrances and Estée Lauder.

Haircare net sales increased +4%, primarily reflecting higher sales from Aveda and particularly online.