Estée Lauder Releases 2023 Fiscal Year Financial Report, Family Member Steps Down from Board

Recently, Estée Lauder released key financial data for the full year and fourth quarter of fiscal year 2023 as of June 30. Estée Lauder stated that due to inflationary pressures and concerns about a possible global economic downturn, retail business adjustments lagged behind expectations. Additionally, several retailers tightened their inventory in the first half of the 2023 fiscal year, adversely affecting the company's organic net sales growth. The group expects to recover organic net sales growth and achieve profit margin recovery in the 2024 fiscal year. 

In the 2023 fiscal year, Estée Lauder's net sales decreased by 10% year-on-year to $15.91 billion. Net profit declined by 58% year-on-year to $1.01 billion, and diluted earnings per share dropped by 57% year-on-year to $2.79. Q4 sales increased by 1.4% year-on-year to $3.61 billion, with a net loss of $32 million, compared to a net profit of $52 million in the same period last year.

By category, skincare net sales decreased by 17% year-on-year to $8.202 billion, with a 56% decline in operating profit, as a result of poor performance in the Asian travel retail sector due to the pandemic. During the reporting period, Estée Lauder, La Mer, and Clinique saw declines in net sales, while The Ordinary, M·A·C, and Bobbi Brown achieved strong double-digit growth. Makeup net sales declined by 3% year-on-year to $4.516 billion, with growth in M·A·C and Clinique, driven mainly by strong growth in lip, face, and eye subcategories for Clinique, and new product releases for M·A·C. However, their growth was offset by declining performance in Estée Lauder and La Mer. Fragrance net sales remained flat at $2.512 billion, with double-digit growth in all regions. The growth in the fragrance division was primarily driven by Tom Ford, Estée Lauder, and Le Labo. Hair care net sales increased by 3% year-on-year to $653 million, with Aveda and The Ordinary's new haircare products driving growth.

By market, net sales in the Americas decreased by 2% year-on-year to $4.518 billion. Net sales in Europe, the Middle East, and Africa decreased by 19% year-on-year to $6.23 billion. Net sales in the Asia/Pacific region decreased by 4% year-on-year to $5.194 billion, the growth was primarily driven by China, Australia, and Japan.

ConCall:

Shortly after releasing the financial report, the Estée Lauder Group announced that Leonard A. Lauder, the founder's eldest son and former CEO of the group, will leave the board in November this year at the age of 90. However, he will retain the title of Honorary Chairman. Considering Leonard A. Lauder's age and the fact that his eldest son, William P. Lauder, is already serving as Chairman of the Board, and his younger son, Gary M. Lauder, will participate in board elections in November this year, his departure is likely unrelated to the current weak performance of the group. During Leonard A. Lauder's leadership of the Estée Lauder Group, he spearheaded several significant business transformation strategies, including building the group into a multi-brand beauty conglomerate and entering the Chinese market.

Facing the continuous deterioration in the performance of the group, as highlighted in the article "What Does Estée Lauder Group's 'Gloomy Q3' Signify?" by ConCall, it was pointed out that the decline in Estée Lauder Group's performance is not only due to a decrease in demand for high-end cosmetics and the delayed recovery of the travel retail business but also due to its core brand Estée Lauder cannot keep up with the industry. However, the perfume and cosmetics business could potentially become a new growth opportunity for the Estée Lauder Group, given that it possesses two strong cards: Le Labo and Tom Ford. Nevertheless, the current situation for the Estée Lauder Group is quite worrying. The only hope lies ahead: accelerating adjustments to catch up with competitors in the new fiscal year.