The Estée Lauder Companies Reports Fiscal 2021 Third Quarter Results
The Estée Lauder Companies reported net sales of $3.86 billion for Q3 ended March 31, 2021, marking a 16% increase year-over-year. Net earnings reached $456 million, compared to a loss of $(6) million in the prior year, with diluted EPS at $1.24. Growth was driven by Skin Care and Fragrance, particularly in Asia/Pacific and online sales, which saw strong double-digit growth. The company also resumed share repurchases and increased its stake in DECIEM. However, the pandemic continued to affect retail traffic and consumer preferences.
- Net sales increased by 16% to $3.86 billion.
- Net earnings reached $456 million, reversing a previous loss.
- Diluted EPS improved to $1.24 from a loss of $(0.02).
- Strong growth in Skin Care and Fragrance product categories.
- Online sales increased significantly, driving overall growth.
- Resumed share repurchases indicating strong cash flow.
- Increased ownership in DECIEM, enhancing growth strategy.
- COVID-19 pandemic continued to disrupt retail traffic.
- Weak demand for makeup products due to fewer usage occasions.
- Intermittent retail store closures in various regions.
The Estée Lauder Companies Inc. (NYSE: EL) today reported net sales of
The Company reported net earnings of
Fabrizio Freda, President and Chief Executive Officer said, “We exceeded our sales and earnings expectations, even as several markets experienced increasing pressure from COVID-19 throughout the quarter. Our growth engines of Skin Care and Fragrance were incredibly powerful. Sales rose in every region, led by double-digit growth in Asia/Pacific, where many markets contributed and sales growth in mainland China accelerated. Online thrived as a growth engine, with sales having increased strong double-digits around the world, and Travel Retail excelled. Estée Lauder, La Mer, Jo Malone London, Clinique, and Tom Ford Beauty led the robust performance of many brands in our portfolio.
Our fiscal year-to-date sales and adjusted operating margin exceed that of the same period in fiscal 2019, as we continue to successfully navigate the challenges of the pandemic. With strong cash flow generation, we resumed share repurchases in the third quarter. We are thrilled to have agreed to increase our ownership in DECIEM, becoming majority owners with a path to full ownership in three years. DECIEM’s soaring brand The Ordinary and new brand incubation capability further enhance our superior multiple engines of growth strategy.”
Freda emphasized “We have achieved these outstanding results while, first and foremost, caring for the safety and well-being of our employees and consumers amid the pandemic. Impressively, we are investing in many compelling long-term growth drivers, including end-to-end innovation with a new center in Shanghai, state of the art manufacturing in Asia/Pacific, global online, and consumer analytics. We are progressing on our environmental goals and acting on our social commitments with urgency. We expect the momentum in our sales growth to build in the fourth quarter of fiscal 2021, not only from easing comparisons but also fundamental strength, as we drive recovery.”
COVID-19 Update
The COVID-19 pandemic continued to disrupt the Company’s operating environment, temporarily impacting retail traffic and certain consumer preferences in the third quarter of fiscal 2021. The resurgence of COVID-19 cases in several countries, particularly in Western Europe and Latin America, led to government restrictions to prevent further spread of the virus. These restrictions included the temporary closure of businesses deemed non-essential, curtailment of travel, social distancing and quarantines.
Retail Impact
While most brick-and-mortar retail stores that sell the Company’s products, whether operated by the Company or its customers, were open during the third quarter of fiscal 2021, most notably in China and the United States, there were intermittent closures throughout the rest of the world. In the United Kingdom, Japan, Canada, Italy, Spain, France, Mexico and Brazil, in particular, many retail stores were temporarily closed for some period during the quarter due to the resurgence of COVID-19 cases. Globally, in areas where stores were open, consumer traffic was significantly reduced as compared to the pre-COVID-19 pandemic period. In addition, while domestic travel in China, especially in Hainan, and some other travel corridors in Asia/Pacific, most notably Korea, were open, international travel has remained largely curtailed globally due to both government restrictions and consumer health concerns that continue to adversely impact consumer traffic in most travel retail locations.
Consumer Preferences
The COVID-19 pandemic-related closures of offices, retail stores and other businesses and the significant decline in social gatherings have also influenced consumer preferences and practices. Specifically, the demand for makeup continues to be weak given fewer makeup usage occasions while other categories have been more resilient.
Cost Controls
In response to the ongoing impacts from the COVID-19 pandemic, the Company continues to implement cost control actions in certain areas of the business to effectively manage the changing business environment.
Fiscal 2021 Third Quarter Results
Adjusted diluted earnings (loss) per share excludes restructuring and other charges and adjustments as detailed in the following table.
Reconciliation between GAAP and Non-GAAP (Unaudited) |
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Three Months Ended March 31, 2021 |
Three Months Ended
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Net Sales |
Diluted Earnings (Loss)
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Diluted EPS |
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% Change |
%
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% Change |
%
|
2021 |
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2020(2) |
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As Reported Results (1) |
16 |
% |
13 |
% |
100 |
+% |
100 |
+% |
$ |
1.24 |
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|
$ |
(.02 |
) |
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|
Restructuring and other charges |
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|
.31 |
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|
.05 |
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Changes in fair value of contingent consideration |
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— |
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(.01 |
) |
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Goodwill, other intangible and long-lived asset impairments |
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|
.07 |
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|
.83 |
|
|
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Non-GAAP |
|
13 |
% |
92 |
% |
|
$ |
1.62 |
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|
$ |
.85 |
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Impact of foreign currency on earnings per share |
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(.03 |
) |
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Non-GAAP, constant currency earnings per share |
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|
88 |
% |
$ |
1.59 |
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(1)Represents GAAP, except Constant Currency percentages |
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(2)For the three months ended March 31, 2020 the effects of potentially dilutive stock options, performance share units, and restricted stock units of approximately 5.9 million, were excluded from the computation of As Reported and adjustments to Non-GAAP diluted loss per share as they were anti-dilutive due to the net loss during the period. These shares were added to the weighted-average common shares outstanding to calculate Non-GAAP diluted earnings per common share. |
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The fluctuations in exchange rates between the U.S. dollar in relation to most currencies had a favorable impact on net sales and operating income in the Company’s product categories and regions outside of the United States.
Results by Product Category (Unaudited) |
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Three Months Ended March 31 |
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Net Sales |
Percentage Change |
Operating
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Percentage
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($ in millions) |
2021 |
|
2020 |
Reported
|
Constant
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2021 |
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2020 |
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Reported
|
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Skin Care |
$ |
2,259 |
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$ |
1,723 |
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31 |
% |
28 |
% |
$ |
804 |
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$ |
418 |
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92 |
% |
Makeup |
1,018 |
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FAQ
What were Estée Lauder's Q3 2021 earnings results?
Estée Lauder reported net sales of $3.86 billion and net earnings of $456 million, with diluted EPS of $1.24.
How did COVID-19 impact Estée Lauder's business?
COVID-19 disrupted retail traffic and consumer preferences, notably reducing demand for makeup products.
What growth areas did Estée Lauder identify?
The company experienced strong growth in Skin Care and Fragrance, particularly in Asia/Pacific and online sales.
What strategic moves did Estée Lauder make in Q3 2021?
Estée Lauder resumed share repurchases and increased its ownership stake in DECIEM.
The Estee Lauder Companies Inc.
NYSE:ELEL RankingsEL Latest NewsEL Stock Data
24.73B
232.33M
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1.41%
Household & Personal Products
Perfumes, Cosmetics & Other Toilet Preparations
United States of America
NEW YORK
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