Estée Lauder Companies (ELC) has reported its financial results for the second quarter of fiscal year 2024.

The company experienced a decrease in net sales, earning US$4.28 billion ($6.56 billion), which is 7 per cent lower compared to the same period last year. This decline was mainly due to reduced sales in Asia, particularly in travel retail and mainland China.

Despite the drop in sales, ELC reported net earnings of US$313 million, although this is lower than the US$394 million earned in the previous year.

The company’s CEO, Fabrizio Freda, noted that Estée Lauder met its organic sales targets and performed better than expected in terms of profitability.

Successful brands included the The Ordinary, La Mer, Clinique, Le Labo, and Jo Malone London.

While challenges remain in the Chinese market and in Asia travel retail, the company anticipates growth in these areas in the latter half of the fiscal year.

“For the second quarter of fiscal 2024, we delivered our organic sales outlook and exceeded expectations for profitability,” he said.

“The Ordinary and La Mer in Skin Care, Clinique in Makeup, and Le Labo and Jo Malone London in Fragrance performed strongly. Many developed and emerging markets around the world continued to grow organically and at retail. While mainland China and Asia travel retail declined, our retail sales trended ahead of organic sales, and these businesses are poised to return to organic sales growth in the second half.”

As part of its strategy to improve profitability, Freda announced an expansion of its Profit Recovery Plan, which now includes a restructuring program.

This plan will lead to a reduction of between three and five  per cent of the company’s workforce, estimated to be around 3,100 jobs.

“We believe this now-larger plan will better position the company to restore stronger, and more sustainable, profitability while also supporting sales growth acceleration and increasing agility and speed-to-market,” he said.

Despite these challenges, the company remains focused on strategic investments and innovation, and is optimistic about future growth opportunities in the global beauty market.

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