THE WHAT? The Estee Lauder Companies has announced its results for the first quarter of fiscal 2025. The US prestige beauty giant saw net sales drop 4 percent versus the prior year period to US$3.36 billion. Organic net sales decreased 5 percent.
THE DETAILS All sectors saw sales drop although the decline was more marked for the skin care and hair care categories (-7 percent and -6 percent respectively) than for make-up (-2 percent) and fragrance (-1 percent).
Similarly, sales by region dropped across the board but Asia/Pacific recorded the biggest fall (-11 percent), while The Americas and EMEA both saw 2 percent shaved from last year’s total.
The company reported a net loss of US$156 million, versus net earnings of US$31 million a year ago. Lauder withdrew its fiscal 2025 outlook and reduced its dividend to a ‘more appropriate’ payout ratio, crediting the ‘complex industry landscape’ and ‘difficulty in forecasting the timing of market stabilization and recovery in China’ as its motivation.
THE WHY? Fabrizio Freda, President and Chief Executive Officer said, “Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated. Our Profit Recovery and Growth Plan drove gross margin expansion, which was partially offset by operating deleverage. Other pillars of our strategic reset also delivered promising initial results.