The Estée Lauder Companies (ELC) celebrated 20 years of operations in mainland China recently and the Asia/Pacific region accounts for 30.65 per cent of the multinational’s global sales – US$5.43 billion.

But reduced tourism to Hainan, the HQ of the China Duty Free Group, the world’s largest travel retailer, and China’s draconian “Zero Covid” policy have battered ELC’s bottom line in the first quarter of its 2023 fiscal year.

Lauder’s Q1 global net sales reached US$3.93 billion – a decline of 11 per cent from the same period last year.

It was an up and down story for skincare, the multinational’s biggest moneyspinner. La Mer, Bobbi Brown and The Ordinary enjoyed sales growth, but the gains were offset by a decline in sales of the Estée Lauder core brand, Dr Jart+ and Origins. Overall skincare sales slumped 11 per cent.

Makeup sales dropped by single digits – 6 per cent – by contrast to the same period last year. But recent launches from M.A.C, including MACStack Mascara and Powder Kiss Velvet Blur Slim Stick Lipstick saw the brand represent 22 per cent of ELC’s colour cosmetic sales.

On a brighter note, fragrance and haircare revenues surged by double digits, mainly fuelled by Jo Malone London and Aveda. Tom Ford Beauty also enjoyed double-digit growth with new launches such as Noir Extreme Parfum and Ebene Fume.

Fabrizio Freda, president and CEO of Estée Lauder, acknowledged that skincare had been strongly impacted by tailwinds in the Chinese market. “But all told, 13 brands grew organically, as M.A.C excelled in makeup, La Mer in luxury skin care, Jo Malone in fragrance and Aveda in haircare.

“Encouragingly, we realised strong double digit growth gains in many large developed and emerging markets around the world.”

Following the release of its first quarter results, ELC has cut its full-year net sales forecast by between 6 and 8 per cent for its 2023 fiscal year. But the multinational’s optimism for its longterm growth opportunities remains undiminished and it has raised its quarterly dividend accordingly.

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