Lauder reports solid business from largest brands in Q1 2013

The Esteé Lauder Companies has reported a solid financial performance for its first quarter of fiscal 2013, ended 30 September 2012. Net sales in the quarter were $2.55bn, a 3% increase on the prior year quarter, and excluding the impact of foreign currency translation, net sales grew 6%. In addition, net earnings were $299.5m in the quarter, an increase of 8%. Diluted net earnings per common share rose 9% to $0.76.

According to Lauder, its Q1 2013 performance was due to solid overall business, particularly from its largest brands. On a local currency basis all product sectors enjoyed growth, save fragrance, which neither grew nor fell. Hair care increased 12%, primarily driven by the success of Aveda’s Invati line and its Pure Abundance Style Prep.

Regionally, sales growth was particularly strong in the US, which benefited from successful new product offerings, while skin care drove sales gains in the Asia Pacific region.

Commenting on the results, president and ceo Fabrizio Freda said: “Our first quarter results demonstrate the solid fundamentals underlying our business and I am pleased and encouraged with our performance even in softer markets. Organic sales growth for the quarter was in line with our expectations, while earnings per share were better than planned. In particular, strong growth in North America and China drove our sales gains and, when coupled with cost of sales improvements and effective expense management we generated a significant operating margin increase [a 150 basis points increase].”

“Looking ahead we will continue to focus our resources on the most attractive areas of growth and on drawing new consumers into our business via successful product and service innovation and effective investment spending… We are confident that we have developed the necessary agility to manage our business effectively. We expect that we will grow our sales 6-7% in local currency this fiscal year, or double the rate of global prestige beauty, while raising the lower end of our earnings per share.”